Mortgage markets finished the week unchanged last week but don’t let that make you think the markets were flat. It was a bumpy five days and rates were volatile.
Friday was the worst day of the week by far.
An all-day deterioration, sparked by better-than-expected housing data, caused mortgage rates to tack on a quarter-percent by the noon hour and markets never recovered.
Rates closed out at their worst levels of the week and the unfavorable momentum figures to carry into this week’s trading, too.
There are two major reasons why rates could rise higher this week:
- Fed Chairman Bernanke said Friday that the near-term growth prospects “appear good”. Comments like this draw money from bond issues to the stock market — a move that’s bad for rates.
- Crude oil hit a 10-month high, a potentially inflationary development. Inflation often leads mortgage rates higher.
Furthermore, rate shoppers should take note that this week will feature the release of two key housing reports — the Case-Shiller Index (Tuesday) and the New Homes Sales report (Wednesday). Both have handily beat expectations in recent months and should that trend continues, mortgage rates would likely rise because of renewed economic optimism.
What’s good for the economy, lately, has tended to be bad for rates.
Whether you’re shopping for a new home or looking to refinance an existing one, be wary of the ever-changing mortgage market. Rates move quickly and without warning. However, they tend to rise faster than they fall.
If you know you will need a rate lock this week or next, consider locking in at the first sign of trouble. Once rates spike, they likely won’t be so quick to fall.