Mortgage Interest Rate Update 5.17.12

Bonds in general continue to perform well this week and mortgage rates remain stable.  News out of Greece last week caused the world markets to rethink the European recovery and thus bonds continue to benefit from that uncertainty. Industry average mortgage rates are improving however the improvements are minimal at best.  China is also making waves in that it appears their economy is slowing and this could have a significant impact on the US economy.  California reported that they will have a 16 billion budget shortfall and the governor is requesting a tax increase to “save” the government from having to drastically cut education, health and law enforcement spending.  This has little impact over California mortgage rates and loan programs offered by lenders but does lend an insight as to the health of state governments.  Perhaps the biggest news of last week was the revelation that Chase lost $2billion in the derivatives market, and that number could increase significantly over the next several months as investors take aim at their mistake.  Just a month ago the CEO was saying their large bets were hedges and that they were confident in their decision to risk so much capital.  Its been rumored that Chase placed trades totaling in the “hundreds” of billions and that it will be very difficult to unwind the trades.

This morning Spanish banks are being hit hard as it’s being reported over 20 banks will be downgraded due to weakness in their economy.  gold and oil continue to sell off in dramatic fashion.  Demand for gold in India is off dramatically as the government imposes a higher tax on the sale/purchase of gold.  Mortgage rates for the next several weeks should remain stable, provided the economic uncertainty continues, and we may see a bit of improvement if we see a dramatic turn for the worse in both the domestic and international economy.