Posted: 07 Dec 2009 06:45 AM PST
Mortgage markets finally reversed course last week, selling off with fury and causing prices to plummet.
When bonds prices fall, rates rise.
The action broke a multi-week winning streak, much to the disappointment of rate shoppers everywhere. Rate hikes came in stages.
First, early in the week, mortgage bonds fell out of favor as traders booked profits ahead of the November jobs report and as concerns over a Dubai Default waned.
Then, on Friday, when the jobs report was ultimately released, it showed a net loss of just 11,000 jobs in November and dip in the Unemployment Rate to 10.0 percent.
Mortgage markets got hit again.
Now, since bottoming last Monday, mortgage pricing is worse by more than 100 basis points. As that figure relates to rates, it's a jump of anywhere from a quarter- to a half-percent.
Last week was a bad week to not be locked in. Unfortunately, this week may not be much better.
Without much data due for release, momentum should lead mortgage rates higher. Amid a few confidence surveys and a speech by Fed Chairman Bernanke, the biggest news on the week will be Friday's Retail Sales report.
Retail Sales matters to mortgage rates because consumer spending accounts for two-thirds of the economy. And now, with jobs data looking stronger, Retail Sales are expected to show a modest increase versus last month.
If the data comes in better-than-expected, mortgage rates should rise -- much like they did on the jobs data. On the other hand, if the data is weak, expect rates to retreat.
So far this season, Holiday Shopping has been mixed.
Mortgage rates tend to rise faster than they fall so if your homebuying or refinance needs are immediate, it may be prudent to lock your rate rather than to wait and see what happens with the economy and this week's momentum.
Despite getting worse last week, mortgage rates are still very low.
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