Zillow: Italian Election Responsible for U.S. Rate Drop

The uncertainty regarding Italy following parliamentary elections, the same issue that was responsible for Monday’s huge stock market sell-off, is being cited by an executive at Zillow Mortgage Marketplace for the six basis point decline in the 30-year fixed-rate mortgage compared with last week.

The average for the 30-year FRM as of Tuesday afternoon is 3.4%, down from 3.46% at this same time last week. Zillow said this rate hovered between 3.42% and 3.47% for the majority of the week, dropping to the current level on Tuesday morning.

"After remaining steady for the past week, rates moved slightly lower yesterday after Italian election results renewed concerns about euro zone economic stability," said Erin Lantz, director of Zillow Mortgage Marketplace. "This coming week, rate movement will depend on sequester discussions in the U.S. and perceived political tensions in Italy and elsewhere in the European Union."

Zillow said the rate for a 15-year FRM is currently 2.64% (down one basis point from last week), while the rate for a 5/1 adjustable-rate mortgage is 2.27% (down five basis points).