At the time I am writing this, mortgage interest rates are less than 1/8th of a percent lower than they were last Friday.

The Euro zone is back center stage in the news this week. On Monday it was announced that Cyprus has asked from more emergency funding from the European Central Bank (ECB). The ECB is requiring that Cyprus comes up with 10B Euros before providing any more funding. Since Cyprus does not have the 10B Euros they closed all banks and proposed a plan where they would raid all bank accounts at a certain percentage of the total account balance. Obviously the people of Cyprus did not like this strategy very much and started rioting. The banks are still closed but no accounts have been raided as of yet. Yesterday the ECB officials told Cyprus that they have till Monday to raise the money or the deal is off.

The crisis in Cyprus caused a big flight to safety rally on Monday. When investors get nervous about uneasy situations they tend to move their money into safe investments like US bonds. When money flows into bonds mortgage rates drop. On Tuesday and Wednesday we saw rates come back up a little but then we saw another drop on Thursday. The key thing to keep an eye out for is if the crisis will spread past Cyprus or be contained there. If the crisis starts spreading past Cyprus or worsens there then rates should drop further. On the flip side if the crisis is resolved looks for rates to go back up.