What's Ahead For Mortgage Rates This Week : March 14, 2011

Mortgage markets improved last week in a week of few economic releases. The one major data point -- Retail Sales -- showed stronger-than-expected, but markets reacted mildly. The report's strength was whispered in advance of the actual release; its reading validated Wall Street's growing faith in the U.S. economy.

Most action last week revolved around the Middle East:

• Libya's internal turmoil continued
• Bahrain clashes intensified
• Saudi Arabia's citizens planned a Day of Rage

In response to these events, Wall Street continued its flight-to-quality. Mortgage-backed bonds are now at their best levels since early-February. Mortgage rates have improved 4 straight weeks.

Unfortunately for rate shoppers in Georgia , the gains have been meager. Conforming mortgage rates have only dropped slightly.

This week, however, the market could move in either direction.

The biggest news on tap is the Federal Open Market Committee's 1-day meeting, scheduled for Tuesday. The Fed is expected to leave the Fed Funds Rate near 0.000 percent, but that doesn't mean that mortgage rates won't change. The FOMC's post-meeting press release will be closely scrutinized on Wall Street. Any changes in theme, tone, or message will cause mortgage rates to dart.

This week also marks the return of housing data with Housing Starts, Building Permits, and Homebuilder Confidence due for release. Housing is believed to be key to the economic recovery so strength in these reports should lead mortgage rates higher.

In addition, several inflation-related data sets will be released including Consumer Price Index and Producer Price Index. Inflation is generally bad for mortgage rates and with gas prices rising to a multi-year high, pressure will be on for mortgage rates to rise.

Lastly, there's Japan.

The nation's earthquake, tsunami, and (now) looming nuclear threat will have implications on the global bond market. Mortgage rates may benefit while the crisis remains unresolved. 

If you've floated a mortgage rate over the past few weeks, it may be time to lock that rate down. Economic factors should be pushing rates higher, but geopolitics and natural disasters are keeping them low.

It's a perfect time to commit to a loan.

What's Ahead For Mortgage Rates This Week : February 28, 2011

Mortgage markets improved last week as Wall Street's concerns about the Middle East trumped its fears of inflation. Conforming and FHA mortgage rates in Georgia fell to a 3-week low.

Last week marked the second straight week in which mortgage rates fell, a streak that follows four straight weeks of climbing mortgage rates.

It's been a bout of good fortune for rate shoppers and home buyers.

In addition, according to Freddie Mac's weekly mortgage rate survey, the average spread between conforming 30-year fixed rate mortgages and 5-year ARMs has widened further.

The two benchmark products are now separated by 1.15%. It's the largest interest rate gap in recent history; one that yields a monthly payment difference of $68 per $100,000 borrowed.

This week, it's unclear in what direction mortgage rates will go.

On one side, there's ongoing unease related to protests in Libya and its neighbors, and that's driving safe haven buying. 

"Safe haven buying" describes when investors flee risky situations and put their money in the safest places possible. Mortgage bonds are one such place, so when safe haven buying is in effect, bond demand is high so bond yields (i.e. mortgage rates) fall.

On the other side, inflation is ramping up.

Recent economic data shows that the economy is expanding, and the Federal Reserve is maintaining its accommodative growth policies. Therefore, this week, the key economic event will be Friday's jobs report. if job creation is high, expect inflation fear to re-ignite, and mortgage rates to rise.

Another risk factor for this week's rate shoppers is that tensions begin to settle in the Middle East, or that Wall Street gets more comfortable with rising oil prices. If that happens, safe haven buying will subside and mortgage rates will resume rising.

There appears to be more reasons for mortgage rates to rise this week than for them to fall. Plan accordingly.

If you have not locked a mortgage rate yet, this week may represent your last chance to get a low one. Talk to your loan officer and make a plan.