Mortgage Rates Surge Lower Thanks to Italy

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Posted To: Mortgage Rate Watch

Mortgage rates dropped abruptly today as political developments in Italy caused investor panic over the weekend. This is a bit of a complex topic, but the bottom line is that Italy will soon be voting on what will essentially be its membership in the European Union. Keep in mind that’s a drastic oversimplification, but that’s what financial markets are trading. An Italian exit of the EU could be a huge deal for several reasons. At the very best, the prospect creates uncertainty in financial markets. Traders cope with that by buying bonds (among other things) from countries that aren’t going anywhere. The bigger the bond market for that country, the more readily it’s treated as a safe haven. As such, much of the panic money has found its way into the US bond market. Excess demand for bonds pushes…(read more)

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