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What’s Ahead For Mortgage Rates This Week : March 16, 2009
Mortgage markets lost a little bit of ground last week, edging mortgage rates higher in a week marked by the largest stock market gains since November.
Once again, mortgage rates couldn’t sustain a rally of more than 5 days. Not since late-2008 have mortgage rates managed to fall two weeks in a row.
Last week’s market was impacted by three distinct factors:
- Bank balance sheets weren’t as bad as feared
- Discussion started on new bank valuation methods
- Traders got optimistic that “the worst is over”
The rally will likely continue into this week, too. This after the 60 Minutes interview with Ben Bernanke in which the Fed Chief said he won’t let big banks fail and that the recovery will likely begin later this year.
It’s the first interview with a sitting Federal Reserve Chairman in history.
Coincidentally, the Federal Reserve will be in the spotlight this week as it concludes a two-day meeting Wednesday after which the Fed will issue its standard, post-meeting press release at 2:15 P.M. Although it’s not expected to make Fed Funds Rate changes, the markets will closely watch the Fed’s language for clues about the next phase of monetary policy.
In general, when the Fed indicates that inflationary pressures may build, mortgage rates rise. Moreover, in the above interview, Bernanke alluded to such inflation and the need to control it in the future.
Despite the small rise in rates last week, mortgage rates remain low and favorable for high-credit scoring borrowers. Volatility is still a factor, however, so if you’re nervous about rates rising, it may be best to lock early in the week — before the Fed’s Wednesday announcement.
Looking Back And Looking Ahead : July 14, 2008
Dateline: Mortgage news brought to you by Tyler Ford and Todd Abelson
Mortgage rates fell slightly in a week that included a bank failure, more oil price spikes, and questions about the health of the nations’ mortgage market.
Rates would have fallen more if not for a late-Friday sell-off that added 0.125 percent to most products.
As financial markets fell under stress, most people missed the strong points that emerged about the U.S. economy last week:
- Fewer Americans filed for unemployment benefits
- Wal-Mart reported stronger-than-expected sales
- Consumer confidence rose for the first time in 7 months
And, also worth noting: homes under contract slipped but remained above the lowest levels of the year, suggesting a potential housing floor.
But, the biggest story of last week was the stock-price collapse and subsequent pressure on Fannie Mae and Freddie Mac. It should be the biggest story of this week, too.
So far, Fannie and Freddie’s issues appear to be more psychological in nature than fundamental, but to an already roiled market, negative perception can quickly become reality. This is one of the biggest reasons why both the Federal Reserve and the U.S. Treasury made public statements Sunday in support of Fannie and Freddie, and in advance of the Asian markets’ opening.
Other events that may move markets this week include Retail Sales data on Tuesday, consumer inflation data on Wednesday and Ben Bernanke’s two-day testimony to Congress which takes place over both Tuesday and Wednesday.
It’s unclear in which direction mortgage rates will go, but because the markets are on-edge, expect rate movements to be sharp and quick. In other words, if you’re in the market for a mortgage this week and you see a rate and payment you like, don’t mess around with it — just get it locked.
Click here for this week’s Mortgage Market Newsletter
(Image courtesy: Wall Street Journal Online)
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