What's Ahead For Mortgage Rates This Week : February 22, 2011

Mortgage markets improved slightly last week, rebounding from the worst 1-week loss in recent history. The gains were geopolitical, however; the result of instability in the Middle East region. Economic data was overlooked as investors made a broad-based flight-to-quality.

For just the second time in 2011, conforming mortgage rates fell on a week-to-week basis.

Rates shouldn't have dropped, though. Here's just a sampling of last week's economic data, all of which can be tied to rising mortgage rates:

• Oil prices are soaring on supply concerns
• The Producer Price Index touched a 2-year high
• Philadelphia Fed Manufacturing Survey predicted strong Q1 growth

Furthermore, the just-released January FOMC Minutes showed an improving economic outlook from members of the Federal Reserve.

Therefore, home buyers and rate shoppers might consider last week's rate drop a gift. Without the growing unrest in Libya, Egypt and Tunisia, mortgage rates would have moved considerably higher.

Instead, rates fell in a bout of what's commonly known as "safe haven" buying.

In safe haven buying, global investors shun risk in favor of safer investments; usually in response to market uncertainty. Terror threats is one such event. Regime overthrow is another. Because the event's long-term effect on markets is unknown, investors choose to move cash to safer asset classes until the future is more clear.

The extra demand for such assets drives prices up and, in the case of mortgage markets, drives rates down.

Last week, rates fell because safe haven buying was so strong. That may not be the case this week. As events play out across the globe, mortgage rates at home in utah will be affected.

There's a lot of economic data set for release this week, including a large series of housing-related figures. Stronger-than-expected data should cause mortgage rates to rise, safe haven buying notwithstanding.

If you're still shopping for rates, or looking for a last chance to lock a low rate, now may be your best chance. Talk to your loan officer about a rate-locking strategy early in the week. As the situations abroad become more clear, mortgage rates should start to climb once again.

What's Ahead For Mortgage Rates This Week : January 10, 2011

Mortgage markets gained last week as a combination of safe-haven buying and an improving economic outlook attracted new buyers. Demand for mortgage-backed bonds outweighed supply and conforming and FHA mortgage rates edged lower.

Last week marked the second straight week that mortgage rates fell in and around utah. Rates had risen over the previous 7 weeks.

According to Freddie Mac's weekly mortgage rate survey, the national average rate for a 30-year fixed rate mortgage is 4.77 percent with an accompanying 0.8 points required.

This week, with no new data due for release, look for last week's two biggest stories -- jobs and debt -- to carry forward. The first such story relates to jobs.

Friday, the Bureau of Labor Statistics released its monthly Non-Farm Payrolls report. Consensus estimates were for 150,000 net new jobs created December, with "whisper numbers" pegging the number as high as 250,000. Mortgage rates increased on the chance that the rumors were right. 

It turned out, they were not.

Accounting for revisions to past months' data, December's jobs data was in-line with expectations, resulting in a mortgage rate retreat that lasted all day Friday. That momentum should carry forward into the early part of this week.

The second story is tied to safe-haven buying.

The U.S. mortgage market benefited from growing concerns within the Eurozone that Portugal could default on its debt. The story emerged three weeks ago when Portugal's debt was downgraded. It picked up steam last week after a weak debt offering. It's a similar beginning to what transpired in Greece last spring.

Mindful of their respective risk, worldwide investors chose to shift risk toward safer asset classes which includes, of couse, mortgage-backed bonds. This week, those risks will remain and the flight to quality assets should continue. Mortgage rates will benefit.

Given the likelihood that mortgage rates will fall this week, it may be tempting to let your mortgage rate float. That strategy could prove foolish.

Mortgage rates fell to historic lows in 2010 and sprung higher at the first possible opportunity. Rates remain at ultra-low levels and have lots of room to rise. This week, consider buying on the dip. It may be the last chance you get.