Mortgage rates increase slightly with European optimism

Monitor Bank Rates recently reported that mortgage rates increased slightly in the past week, with the 30-year fixed rate at 4.09 percent and the 15-year fixed rate at 3.36 percent. One reason why the mortgage rates have held securely at a low level is due to progress being made in Europe regarding its debt crisis.

Free Rate Update reported French President Sarkozy and German Chancellor Angela Merkel have been strategizing on how to best combat the Euro zone debt crisis. Investors have noticed that plans are under way to handle the European debt, thus mortgage rates were able to sustain low levels.

According to Total Mortgage, S&P has recently placed 15 European nations, including Germany, on notice for a potential credit ratings downgrade, but many markets are already pricing the debt of these countries as if they had already been downgraded, so there was no panic by investors. Similar to when S&P downgraded the credit rating of the United States, the European downgrade would come after financial turmoils has already occurred.

Further, S&P has placed the European Financial Stability Fund's debt on watch for a potential two-notch downgrade, despite the fund being one of the first European bodies to try and resolve the debt crisis, the source reported. The fund gives troubled member states access to funds, and can also borrower money and issue bonds.

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