Jun 242015

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By G. Steven Bray

Last week gave us a nice pause in what had been a steady rise in mortgage rates, but it apparently had more to do with market mechanics than a fundamental change of sentiment.

This week is a fairly busy one for US economic data. The most interesting may be housing data, which finally has been showing strength. The housing market has been a big missing in the anemic recovery from the financial crisis. While other economic data remains lackluster, the thinking is that housing may drag the economy into a more robust recovery. In anticipation of more robust growth, markets are pushing interest rates higher.

Pushing the other way are Greece and weakness in China, but Greece may be the key this week. Greece has a huge debt payment due, and they have no way to pay it without an extension of its bailout. Based on recent headlines, it sounds like Europe fears the uncertainty of a Greek default more than it fears that fiscal mismanagement will drain the EU of economic growth. But, if Greece defaults, I bet we see a nice, albeit temporary, rally in mortgage rates.

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