Mortgage markets had an awful week last week as a combination of strong economic data and stand-out earnings results led investors into more risky investments.
The Dow Jones Industrial Average was up 7 percent.
Mortgage rates, unfortunately, didn’t fare as well. As the first week since June in which mortgage rates rose, rates were up by a lot.
Mostly for three reasons.
The week’s first big mortgage rate bump came Tuesday, right after Goldman Sachs released its blowout quarterly numbers. As one of the world’s largest financial firms, Goldman’s strong showing hinted that the financial crisis may finally be finished.
Next, rates were impacted by the release of the Fed Minutes from its June meeting. In the report, it was revealed that Ben Bernanke & Co raised the economic forecast for both 2009 and 2010, noting that the recession should be ending soon.
Lastly, June data showed that Retail Sales is expanding and that jobless claims are falling — two potential positives for the U.S. economy that relies so heavily on consumer spending.
This week, without much data, the mortgage market should continue to take its cue from the stock market. If stocks improve, rates are expected to worsen. And vice versa.
The week’s key events are Fed Chairman Bernanke’s Tuesday testimony on Capitol Hill and Thursday’s Existing Home Sales data. Mortgage rates remain volatile so if you’re offered a rate that comfortably fits your household budget, consider locking in before the market can change.