The mounting pressure on sub-prime lenders sparked talk of a recession as economists wonder how the housing market will be impacted.
Many sub-prime lenders discontinued 100% financing programs this past week and a few of the biggest names — New Century and Fremont — stopped taking applications altogether.
These changes pushed mortgage rates lower through market close Thursday. Upon Friday’s open, however, the Non-Farm Payrolls report revealed enough employment and wage strength to make markets reconsider their long-term perspective.
Mortgage rates snapped back quickly and erased much of the week’s gains.
This week is back-end heavy with data which should generate more volatility as the week goes on.
Most important to watch for: Thursday’s Producer Price Index (PPI) and Friday’s Consumer Price Index (CPI). Both are widely watched for clues about economic growth prospects.
