What's Ahead For Mortgage Rates This Week : June 21, 2010

FOMC meets this weekMortgage markets improved last week on weaker-than-expected jobless figures, ongoing troubles in Europe, and a tame reading on domestic inflation.

As a result, conforming mortgage rates for Georgia fell last week, drawing loads of new refinance applications.

For a brief moment Thursday afternoon, mortgage bond prices pierced a key support level, dropping rates in Kennesaw to their best levels of the year. 

It didn't last long, however. By Friday morning, pricing was worsening on profit-taking and in preparation for this week -- a week that promises to be heavy on both data and rhetoric.

To mortgage markets, this can be a dangerous combination.

The biggest news of the week is the Federal Reserve's 2-day meeting, scheduled for Tuesday and Wednesday in Washington D.C. 

The Fed is expected to hold the Fed Funds Rate in its target range near 0.000-0.250 percent. It won't be what the Fed does at its meeting that will matter to rates, though. It will be what the Fed says -- about jobs, about growth, about inflation -- in its post-meeting press release.

Remarks that reflect well upon the economy should lead mortgage rates higher. Remarks viewed as negative should lead mortgage rates down.

There's key data due for release next week, too:

  • Tuesday : Existing Home Sales and Home Price Index
  • Wednesday : New Home Sales
  • Thursday : Continuing Jobless Claims
  • Friday : GDP and Consumer Sentiment

Mortgage rates remained relatively tame last week.  This week, volatility should return.

If you're shopping for a mortgage, rates remain very low but could reverse quickly. Your biggest risk is tied to the Fed's adjournment Wednesday afternoon.

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