Mortgage markets improved last week despite a major mortgage bond sell-off Friday afternoon. Prior to the jump, conforming mortgage rates had cut new, all-time lows by Thursday, only to lose up to 0.250 percent on the last day of the week.
Meanwhile, the same type of news that drove rates lower Monday through Thursday also contributed to rates rising Friday — revised projections for the U.S. economy.
Early in the week, “bad” news piled on which, in turn, lowered expectations for the economy and pushed mortgage rates down:
- Existing Home Sales dropped 27% from June
- Single-Family New Home Sales dropped 12% from June
- Purchases of “big ticket” items plunged
Then, on Friday, two events revised the market’s expectations back higher:
- Q2 GDP was revised lower, but not as low as had been expected
- Fed Chairman Ben Bernanke said the economy will keep expanding through the end of the year and into 2011
When Chairman Bernanke talks, markets listen. His comments about the U.S. economy helped fuel that late-Friday surge in mortgage rates last week.
This week, the momentum could continue — depending on the data.
There’s a lot for markets to digest this week including key inflation figures from the government; home value data from Case-Shiller; Fed Minutes from the Federal Reserve; and, the always-important jobs report due Friday.
Since April, mortgage rates have been on a downward trajectory and that may continue this week. Or, it may not. If you own a home and haven’t talked to your loan officer about a refinance, now is as good a time as any — rates are at historic lows and could rebound at any time.
Last June, mortgage rates rose 1.125% in 10 days. Under the right circumstances, it could happen again.