Despite a weakening employment outlook for Americans, the economy flashed signs of a rebirth last week. It wasn’t enough to reverse the recent mortgage rate trend, however.
For the fourth week in a row, mortgage rates increased, if only slightly.
The biggest story of last week was the revelation that 2.5 million jobs have been lost since Labor Day. Strangely, this data may lead to two boosts toward a market recovery in the days ahead.
- Monday, the Senate is expected to vote on an $820 billion stimulus package
- Tuesday, Treasury Secretary Geithner is expected to outline a bank recovery program
Both of these events figure to be heavily influenced by the number of out-of-work Americans and the pressure to restore confidence in the U.S. economy. We learned last week that Americans have moved from spenders to savers, after all, and in the absence of consumer spending, an economy is hard-pressed to expand.
In other words, rising unemployment is putting pressure on Capitol Hill and Wall Street thinks the final government plan will be good for business.
This is one reason why the stock market added 2 percent Friday just hours after the worst jobs report in 34 years. Traders are ever-hopeful. What it means for mortgage rates is a little less clear.
Never mind the data released this week, mortgage rates will be most influenced by news out of Washington. In addition to the Stimulus Package vote and Geithner’s plan for the U.S. banks, Fed Chairman Ben Bernanke will testify Tuesday in front of the House Financial Services Committee.
In all, there’s a lot for mortgage bond traders in which to sink their teeth this week and most of it is concentrated on Monday and Tuesday. Expect high levels of volatility and rapid changes in rates.
Unfortunately, we can’t know if rates will be moving up or down so if you see a rate that fits your budget, consider locking it in with your loan officer. If rates rise, they’re expected to rise quickly.