Short Term Direction of Mortgage Rates Depends on Greece

Mortgage rates increased the past month, following 10 year U.S. Treasury yields higher. Mortgage rates today on 30 year conforming loans are averaging 4.18 percent. About a month ago, 30 year mortgage rates were averaging 3.85 percent. Where rates move the next week is entirely dependent on how Greece's debt talks play out.

Bond yields in the United States and across the globe have been swayed on the ups and downs in debt talks involving Greece and its creditors. The most recent news is that its creditors rejected Greece's new proposals, according to Greek Prime Minister Alexis in a Tweet.

Their proposal was rejected but counterproposals were submitted, which is why 10 year U.S. bond yields are only down 2 basis points to 2.38 percent this morning. Greece needs more aid to prevent it from defaulting on its 1.6 billion euro debt at the end of the month. Lenders so far have refused to release funds to Greece unless more reforms are done.

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

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The lenders whose rates and other terms appear on this chart are ICB's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #1661781

5.760%

15-Year Fixed

5.625%

$3,673

Includes 0.625 points for $2,500

Lender Fees: $1,173

$3,295 /mo

Next >

NMLS #757416

5.868%

15-Year Fixed

5.750%

$3,060

Includes 0.765 points for $3,060

Lender Fees: $0

$3,322 /mo

Next >

NMLS #1025894

5.886%

15-Year Fixed

5.750%

$3,512

Includes 0.703 points for $2,812

Lender Fees: $700

$3,322 /mo

Next >

NMLS #1067

5.891%

15-Year Fixed

5.750%

$3,652

Includes 0.913 points for $3,652

Lender Fees: $0

$3,322 /mo

Next >

NMLS #3030

6.532%

15-Year Fixed

6.375%

$4,000

Includes 1.000 points for $4,000

Lender Fees: $0

$3,458 /mo

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NMLS #1661781

6.620%

30-Year Fixed

6.500%

$5,173

Includes 1.000 points for $4,000

Lender Fees: $1,173

$2,529 /mo

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NMLS #1025894

6.735%

30-Year Fixed

6.625%

$4,564

Includes 0.966 points for $3,864

Lender Fees: $700

$2,562 /mo

Next >

NMLS #757416

6.822%

30-Year Fixed

6.750%

$2,968

Includes 0.742 points for $2,968

Lender Fees: $0

$2,595 /mo

Next >

NMLS #1067

6.838%

30-Year Fixed

6.750%

$3,620

Includes 0.905 points for $3,620

Lender Fees: $0

$2,595 /mo

Next >

NMLS #1661781

7.244%

5-Year ARM

7.125%

$4,977

Includes 0.951 points for $3,804

Lender Fees: $1,173

$2,695 /mo

Next >

NMLS #3030

7.338%

30-Year Fixed

7.250%

$3,500

Includes 0.875 points for $3,500

Lender Fees: $0

$2,729 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

Grexit Would Send Bond Yields and Mortgage Rates Plummeting

If Greece defaults at the end of the month equity markets will be in a freefall. As a result, bond yields would plunge in the classic flight-to-quality we have seen before when markets tumble. Bond yields move inversely to prices of bonds so as bond prices move higher, yields move lower. 10 year bond yields would fall back below 2.00 percent and might even break through the record low of 1.67 percent set in early 2013.

30 year mortgage rates would fall back below 4.00 percent and might also fall below the record average low of 3.34 percent set in early 2013. Conventional 15 year mortgage rates that are currently averaging 3.19 percent would fall below 3.00 percent and possibly break below the record average low of 2.56 percent.

Jumbo mortgage rates on 30 year loans currently averaging 4.35 percent would fall below 4.00 percent and towards 3.75 percent. 15 year jumbo mortgage rates averaging 3.19 percent would fall back below 3.00 percent and possibly as low as 3.50 percent.

If this scenario plays out, don't expect rates to stay low for long. Investors will eventually realize a Grexit from the Euro and possibly the European Union won't have a profound impact on the U.S. economy. At that point, equity markets will start rallying, bond yields will rise, and mortgage rates will move higher.

Outside of the Greek issue, the long term trend for bond yields and mortgage rates are higher. Yields and rates were driven to record lows the past 6 years as a result of the financial crisis, Great Recession, and the FOMC lowering the fed funds rate to a record low.

Direction of Mortgage Rates is Higher by the End of 2015

Now that the economy is back on its feet, interest rates have nowhere to move but higher. The FOMC is expected to increase the fed funds rate by 25 basis points in September, which would be the first increase in almost 10 years. While mortgage rates are not directly dependent on the federal funds rate, an increase will send bond yields higher, thus sending mortgage rates higher.

The FOMC is expected to do 2 or 3 interest rate increases in 2015. The most likely scenario are for 25 basis point increases for each. That would put the fed funds rate, currently in a range of zero percent to 1/4 percent, towards 0.50 percent to 0.75 percent by the end of the year.

As a result, 30 year conforming mortgage rates and 30 year jumbo rates would be between 4.75 percent to 5.00 percent. 15 year conforming mortgage rates would head towards 4.00 percent. 15 year jumbo mortgage rates would be around 4.50 percent.