Why Did Mortgage Rates Go Up 3 Days In A Row?

Mortgage markets worsened for the third straight Tuesday after the government reported June's Retail Sales report came in slightly better than expected.

Since falling to near 5.000 percent last week, 30-year fixed conforming mortgage rates have risen by almost 3/8.

It's a similar mortgage rate pattern to what we've seen over the last 10 months -- rates drift down to near their "all-time lows", and then surge higher over just a few days time.

This week's movement, in particular, is vexing home buyers and would-be refinancers.

Many people thought mortgage rates would break below the 5.000 percent threshold. The markets, however, had other ideas.

In addition to the unexpectedly strong Retail Sales data, last month's Producer Price Index reported higher than expectations, too.

A rising PPI is important to rate shoppers because the figure is akin to the Cost of Living measurement for household, but for American businesses instead. The thought goes that if business costs are rising, consumer costs will eventually rise, too, as businesses share their expenses with American households.

This is inflationary, of course, and inflation is awful for mortgage rates. It's part of the reason why mortgage rates closed higher again Tuesday.

All year long, mortgage rates have been jumpy and unpredictable. This past week has been no different and it's why you shouldn't necessarily try to time for a market bottom with mortgage rates.

If an interest rate looks good to you today and the payment is manageable, consider locking it in. There's no guarantee rates will ever fall back toward 5.

Weak Retail Sales Lead To Increased Home Affordability

Home affordability improved again Wednesday after the government reported worse-than-expected results for April's Retail Sales report.

Mortgage rates edged lower for the third consecutive day.

The impetus for the rate rally this week may be a long-awaited stock market correction. After touching multi-year lows in mid-March, the Dow Jones added 30 percent going into last Friday.

It has since lost close to 300 points and as those dollars leave the stock market, they're finding their way toward bonds.

The demand is pushing bond prices up which, in turn, causes rates to fall.

Yesterday morning, the rally in rates picked up steam on the heels of April's Retail Sales report. With figures off a half-percent from March and roughly 7 percent from 2008, investors are concerned that consumer spending may not be as strong into the summer months as previously expected.

Consumer spending is important because it comprises two-thirds of the economy and is believed to be the way out of the current recession.

If expectations of a recovery caused mortgage rates to rise recently, it makes sense that a revision of those expectations would cause rates to fall.

Markets are fickle, however, and the slightest bit of "good news" could pump cash back into stocks at the expense of bonds. Until then, however, enjoy the low rates -- they may not last long.