European Market Jitters Continue To Affect The US Economy Mortgage rates fell last week as investor concerns over the European economy grew. Fears of growing differences between wealthier European nations and European nations needing economic aid brought higher bond prices and lower mortgage rates. Positive news for Cyprus came when an agreement for an EU bailout was reached, but strict terms indicate that Germany and other nations are growing less enthusiastic about bailing out the banks of EU nations with shaky economies. Meanwhile, the Italian government has not been able to agree on a coalition government, which reduces the chances for economic reform in the EU's third largest country. European trade with the U.S. could fall as the result of the EU's ongoing economic challenges; this in turn would likely reduce U.S. inflation, which is good for lower mortgage rates. Last Week's Economic News Quiet, No Major Surprises. Low inflation could also prolong the Fed's commitment to its quantitative easing program that is designed to keep long term interest rates, including mortgage rates, lower. This week, the European Central Bank (ECB) meeting scheduled for Thursday and monthly Employment Data set for release Friday are among anticipated economic news events.
Now is a great time purchase real estate or refinance, taking advantage of historic low mortgage rates, while avoiding any future interest rate volatility.