The economy posted stronger-than-expected data last week, reigniting fears of inflation on Wall Street.
The positive-slanted economic news caused conforming mortgage rates to rise by another 1/2 percent last week.
It marked the second week in a row of soaring mortgage rates and the fifth week out of six that rates have moved higher.
Conforming mortgage rates are now as high as they’ve been all year and rest at the levels of December 2008.
The biggest news of last week is likely to influence mortgage rates this week, too.
On Friday, we learned that 345,000 Americans lost their jobs in May. And while that’s an awfully large number, it wasn’t nearly as bad as Wall Street had expected. Furthermore, the Unemployment Rate spiked to over 9 percent.
Now, again, with respect to the Unemployment Rate, the number looks bad, but the data may be a positive. This is because the Unemployment Rate measures Americans in the workforce versus the unemployed actively looking for jobs.
If the number of people trying to re-enter the workforce starts to surge, it’s basic math that Unemployment Rates will rise. This is what some economists think happened last month and it served as the backdrop for Friday’s rate surge.
With fewer Americans expected to be out of work, consumer spending seems poised to rebound in the months ahead, pushing the economy out of recession sooner than expected. If the sentiment holds this week, mortgage rates should rise even more.
Without much new data this week, markets are likely to trade on emotion — a difficult situation for rate shoppers. Conforming mortgage rates have been extremely volatile since May and are changing every few hours. If you see a rate you like, consider locking it.
Wait around too long, and it’ll be gone.