Mortgage markets lost ground last week on growing optimism for the economy, a poor run for the dollar versus the euro, plus the lingering concerns that inflation will grip the U.S. long-term.
Conforming mortgage rates rose for the fourth week in a row, stymying rate shoppers and raising the effective cost of homeownership for new buyers in need of a mortgage.
After a spectacular run that drew 30-year fixed rates to near 4.00, mortgage rates have returned to their highest levels since late-June.
Last week was heavy on news. Bond traders were hit with the Beige Book; with the ADP Challenger Report; with the ISM Manufacturing Report; and, with Pending Home Sales data for October. Each release moved markets.
Only Friday’s Non-Farm Payrolls report kept mortgage rates from really soaring.
According to the government, 39,000 net new jobs were created in November, and September’s and October’s data was revised higher by a combined 38,000. The sum of these figures fell well short of Wall Street expectations — investors has expected 146,000 net new jobs in November.
As a result, mortgage rates made their largest, intra-day improvement of the year Friday morning, although they slid higher through the afternoon. Rates fell 1/8 percent Friday as compared to Thursday and rate shoppers may see that momentum carry forward into this week.
Fed Chairman Ben Bernanke gave a televised interview Sunday evening in which he said, among other things:
- “The fear of inflation is way overstated.”
- Additional bond market support is “certainly possible”.
Both comments should help to allay inflation concerns, and may lead mortgage rates lower this week. If you’re floating a mortgage rate, keep a watchful eye on markets and be especially wary if mortgage rates start to rise again. November was rough on mortgage bonds.
If December follows suit, expect mortgage rates to approach 6 percent.