Interest Rates Improve and Reach This Year's Lows

So if you pay attention to the news it is hard to ignore the fact that the World is having a tough go around right now. Greece does not have a working economy and is looking for a bailout from, well just about anybody. Yesterday Union protesters stormed parliament demanding, well probably a whole lot of things considering it was a riot. Today, the Greek parliament is meeting (kind of curious how they managed to survive the riot and take back the building) and trying to determine a resolution that will ensure Greece remains Greece... in the meantime the real country that will answer that question - Germany - is screaming "why are we on the hook, screw Greece!"

The IMF is offering a bailout (which we, the United States, fund 17% of) but countries like Germany are protesting, tired of being the patsy with open pockets. I know, what in creation does this have to do with rates? Everything.

With the collapse of Greece the Euro has fallen in value against the dollar. Our short term equities markets (stock market) are experiencing a sell off as investors pull out anticipating a retraction in future demand (see yesterdays post and graph). To keep their money active investors are now looking at long term markets, one of which is the MBS, or mortgage backed securities market. As they invest in the MBS market, interest rates offered to consumers improve because there is more money in the market to lend so the cost of borrowing that money comes down (rate of interest). Essentially Greece has created a perfect storm sending investors to our market in droves and we're a tasty watering hole for those parched.

What is happening across the pond is a big deal! Make no mistake about it, Greece may no longer exist, and it will definitely not exist as it does today. What is scary is Greece may not be the only Country to fall... Spain, Portugal, and Italy are all close to the tipping point. Ever play dominoes?

Interest rates for prime borrowers are currently 4.625% par on a 30 year fixed conforming loan and 4.5% at around a .5 point in up front cost. Of course I'm talking 20% or more down on a primary residence purchase loan. Share this tidbit of information with your clients and see if these lower rates can't convince them now is the time to submit that offer they have been considering.