To say that the mortgage markets took a beating last week would be an understatement.After better-than-expected consumer spending, housing and employment data, stock markets rallied and mortgage markets suffered.
Mortgage rates unwound completely their gains of the last six weeks and now rest near the loftiest levels from June.
Headed into Monday's market activity, mortgage rate momentum is moving away from home buyers and would-be refinance.
This week, there isn't much data to reverse the tide but there is a Federal Open Market Committee meeting.
The FOMC is the policy-setting group of the Federal Reserve and, each time the FOMC meets, markets can get volatile. This is because of the Fed's power to speed up or slow down economic growth via the Fed Funds Rate.
When the Fed Funds Rate is rising, the economy is generally expanding at too fast of a pace for the Fed's comfort and when the Fed Funds Rate is falling, the economy is generally slowing.
Today, the Fed Funds Rate is as low as it's even been -- resting in a "target range" of 0.000-0.250 percent. The Fed isn't expected to change that.
However, just because the Fed Funds Rate won't be changing doesn't mean that mortgage rates won't be changing. Depending on what the FOMC says in its post-meeting press release, mortgage rates could rise or fall -- maybe even by a lot.
If the Fed shows concern for inflation, rates should jump; worry of a recession retread would draw rates down.
The FOMC adjourns from its 2-day meeting Wednesday at 2:15 PM so consider locking prior the official announcement.
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