Mortgage markets took a beating last week, sending conforming mortgage rates soaring Wednesday afternoon. Despite a modest recovery Thursday and Friday, though, mortgage rates still moved higher on the week overall.
It was the fourth time in 5 weeks that mortgage rates worsened.
By far, the biggest news of last week was Wednesday’s mortgage market meltdown.
Beginning shortly after 1:00 PM ET, and in the span of about 90 minutes, the 30-year fixed mortgage rate soared. The action was so swift that a number of mortgage lenders shut down their Lock Desks, unwilling to accept new business.
There was no “news”-like reason for the action, by the way — just a general feeling on Wall Street that the U.S. government’s massive debt load may lead to inflation sometime in the future. As inflationary fears rise, mortgage rates often rise with them and this is what we witnessed happened Wednesday.
Markets regained their cool Thursday and Friday, but could only erase half of Wednesday’s surge.
This week, look for data to determine whether mortgage rates rise or fall. Monday and Friday will be the biggest days.
On Monday, in addition to releasing consumer spending data from May, the government publishes the Federal Reserve’s preferred inflation gauge. If either number comes in hotter-than-expected, mortgage rates should rise.
Similarly, if Friday’s employment data is better-than-expected, rates should rise, too. More working Americans means more consumer spending and spending makes up two-thirds of the economy.
Markets expect that another 550,000 workers lost their jobs last month, raising the 12-month total to 5.65 million.
Between Monday and Friday, a number of Federal Reserve members will be speaking publicly, including Fed Chairman Ben Bernanke. Each speaker’s statements, of course, can influence mortgage rates as well.
Overall, markets remain volatile and mortgage rates are jumpy. If you find a rate that fits your budget and with which you can be comfortable, consider locking it in before the news gives the rate reason to change.