In a week defined by low volume and lack of conviction, mortgage markets idled ahead of the holiday last week. Friday’s post-holiday action was even slower.
After falling for two consecutive weeks, mortgage rates held flat last week.
It’s somewhat surprising that mortgage rates didn’t rise considering the flow of negative economic news last week:
- Joblessness appears to be worsening
- Consumer spending sputtered
- The U.S. dollar is showing weakness
Lately, each of these elements has played a role in mortgage rate movement but it’s the last bullet point that could throw home buyers and refinancing Americans for fits.
It’s because of the relationship between mortgage rates and the strength of the U.S. Dollar.
All things equal, a strong dollar pressures mortgage rates lower whereas a weak dollar pressures mortgage rates up. And, because the dollar’s recent beat-down has been swift, it wouldn’t be unexpected to see similar mortgage market movement at any time.
This week, like last, is interrupted for the holiday. Regardless, there’s much going on. Aside from two economic reports, there is nothing else for markets to digest and no planned speeches by members of the Fed.
Expect just a small number of traders to show up for work this week. This means volume will be especially light. But don’t be lulled into taking your eyes off the market — low volume on Wall Street is sometimes accompanied by high levels of volatility.
For now, mortgage rates are hovering near their 2008-lows. Given the path of the dollar and low-volume trading, that could all change in a flash.