Houston's Rate Sheet

Rate Watch

Mortgage Rates finish up after another volatile week

Last week's mortgage market was very volatile yet again. The stock market showed new signs of optimism, and many investors moved their money from the bond/mortgage markets into the stock market to take advantage of the new gains. This dynamic forced mortgage rates to move up slightly on the week.

Besides the stock market rebound, there was good economic news on a variety of fronts. Both the Existing Home Sales and New Home Sales data provided varying degrees of positive news. Existing Home Sales rose in the month of February, and although, New Home Sales were not positive, it appears New Home Sales prices are leveling off.

On Friday, the Personal Consumption Expenditure (PCE) price index rose only .1 percent in the month of February. The PCE price index is the Federal Reserves most liked reading on inflation, and .1 percent is well within the Fed's .2 percent inflation goal. This news may help to bring mortgage rates down slightly early this week.

This morning, Bankrate.com's overnight average on the 30-year fixed rate mortgage rose to 5.75 percent, up from last Monday's 5.62 percent. The 15-year fixed rate mortgage rose to 5.27 percent, up from 5.09 percent. As has been the case with Adjustable Rate Mortgages (ARM) for the past few weeks, the 5-year ARM program moved in the opposite direction. The 5-year ARM fell to 5.67 percent, down from last Monday's 5.73 percent.

This week, the Employment Report, the mother of all economic reports, will be released. The Employment Report provides investors with a wealth of information regarding how many people are looking for jobs, how many have them, what they're getting paid and how many hours they work. These numbers can really move markets and change the dynamics of investor confidence. If the employment numbers come in strong, there could be renewed optimism in the stock and equity markets which could help to push mortgage rates higher. Borrowers could be at risk, if they plan on leaving their rates unlocked through the release of this report.

Another event to watch this week is Federal Reserve Chairman Ben Bernanke’s testimony in front of Congress on Wednesday and Thursday. Investors will be looking for indications of the future direction of Fed policy, as well as the Chairman's opinions with regard to inflation and the state of the economy.

It could be another volatile week, so borrowers should lock rates as soon as possible.

posted by Vincent Biondillo @ 3:06 PM