Rate update: Greek tragedy may dictate US mortgage rates

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By G. Steven Bray

Is the rate rally over? Rates zoomed up after last Friday’s jobs report beat expectations and showed that wages increased at the fastest pace in a long time. As I pointed out last week, that’s been a big missing in our recovery. Real hourly earnings have been stagnant since the reported end of the recession.

So, if you’re applying for a mortgage, how should you react? Well, first of all, one month does not define a new trend. Wages declined in Dec, so Jan’s increase basically put us back on the previous trend. Unless other economic reports confirm rising wages, markets are likely to forget the increase soon.

Of more consequence to rate markets is the ongoing Greek tragedy. Eurodrama has been largely responsible for our recent low rates. Greece recently elected a new government, and its officials want to shed the country of EU-forced austerity. EU officials meet this week to discuss the situation. A reduction in drama would be bad for rates. Should it appear that Greece will leave the EU, rates could head down again.