Looking Back and Looking Ahead, August 10, 2009

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.

Looking Back and Looking Ahead: June 29, 2009

Mortgage markets improved last week on the heels of benign economic data and a non-inspired press release from the Federal Reserve.

Aside from trader momentum, 3 market-moving events helped set the pace last week:

1.Housing data hinted at strength
2.Jobless data showed softness
3.The Fed said growth appears on-track

The combination of the three created volatility that -- for just the second time in the last 8 weeks -- worked in favor of rate shoppers.

Mortgage rates changed a lot last week, but they trended lower overall.

Already, however, markets are looking ahead to this week's holiday-shortened trading sessions. There is a ton of data to be released and as the week progresses, the ever-falling market volume could create some wide swings in mortgage rates.

The mystery is whether rates will be getting better or worse.

On Tuesday, markets will get Consumer Confidence and Case-Shiller Index data at 9:00 AM ET. The Case-Shiller Index is a home price measurement and it always gets a lot of press. Strength in either number should lead mortgage rates higher. Weakness should help rates ease.

Then, on Wednesday, Crude Inventories should take the spotlight. Normally, we don't watch this data point too closely but with gas prices easing last week, rising oil supplies could mean even lower gas prices ahead. This is anti-inflation and a good sign for mortgage rates.

And lastly, on Thursday, the government releases June's jobs report. This report is always a market-mover -- good or bad. And with trading volume low by Thursday, mortgage rates should move more than "normal".

Be ready to lock at a moment's notice this week. Mortgage rates continue to be volatile and the holiday-shortened week won't do anything to counter that. If you're the nervous type, when you see a rate that fits your budget, consider locking it in.

Looking Back and Looking Ahead, June 15, 2009

The mortgage market roller coaster continues. Markets worsened badly in the early part of last week, before rallying into Friday's close.

Overall, mortgage rates were slightly higher for the week even though -- briefly -- they rose to levels not seen since November 2008.

Last week marks the third week in a row and the sixth out of the last seven that mortgage rates increased.

It's not all bad news for mortgage rate shoppers, however. The market's surge higher appears to be slowing and its momentum may start to reverse.

See, mortgage rates don't come from thin air. They're based on the price of mortgage-backed bonds and, over the last few weeks, it seems as if nobody on Wall Street wanted anything to do with them. A massive sell-off that caused bond prices to plummet and mortgage rates to soar.

Freddie Mac says rates are up 3/4 percent in the last 3 weeks but loan officers will tell you that's undercutting it. Conforming mortgage rates are up more than 1 percent since Memorial Day.

The biggest reason for the sell-off was that markets feared a runaway inflation scenario. The U.S. Treasury has assumed an unprecedented debt load this year and to repay it, markets expect the government to print more cash -- an inflation-inducing scenario.

However, when a number of high-profile investors and a country said last week that their faith in the U.S. economy remains strong, markets viewed it as an endorsement of government-issued debt. It served as Thursday and Friday's rate-dropping catalyst.

This week, mortgage rates will move on three points:

1.Data, including key inflation and housing reports
2.Rhetoric, including 5 Federal Reserve member speeches
3.Momentum, including technical trading patterns

It's unclear whether these factors will lead rates higher or lower, but one thing has been clear lately -- when mortgage rates change, they change quickly.

Therefore, if you're shopping for a rate and find one that fits your budget, consider locking in right away. With rates changing every few hours, it's likely that if you wait too long, the rate will be gone

Looking Back and Looking Ahead: June 8, 2009

The economy posted stronger-than-expected data last week, reigniting fears of inflation on Wall Street.

The positive-slanted economic news caused conforming mortgage rates to rise by another 1/2 percent last week.

It marked the second week in a row of soaring mortgage rates and the fifth week out of six that rates have moved higher.

Conforming mortgage rates are now as high as they've been all year and rest at the levels of December 2008.

The biggest news of last week is likely to influence mortgage rates this week, too.

On Friday, we learned that 345,000 Americans lost their jobs in May. And while that's an awfully large number, it wasn't nearly as bad as Wall Street had expected. Furthermore, the Unemployment Rate spiked to over 9 percent.

Now, again, with respect to the Unemployment Rate, the number looks bad, but the data may be a positive. This is because the Unemployment Rate measures Americans in the workforce versus the unemployed actively looking for jobs.

If the number of people trying to re-enter the workforce starts to surge, it's basic math that Unemployment Rates will rise. This is what some economists think happened last month and it served as the backdrop for Friday's rate surge.

With fewer Americans expected to be out of work, consumer spending seems poised to rebound in the months ahead, pushing the economy out of recession sooner than expected. If the sentiment holds this week, mortgage rates should rise even more.

Without much new data this week, markets are likely to trade on emotion -- a difficult situation for rate shoppers. Conforming mortgage rates have been extremely volatile since May and are changing every few hours. If you see a rate you like, consider locking it.

Wait around too long, and it'll be gone.

Looking Back and Looking Ahead: May 26, 2009

Mortgage markets reacted poorly to not-as-strong-as-expected housing data and employment data last week causing mortgage rates to rise on the week overall.

It was the third time in 4 weeks that mortgage rates were up.

To the detriment of rate shoppers, mortgage rates were especially volatile Thursday and Friday.

As an increasing number of traders punched out ahead of the 3-day weekend, the mortgage pricing swings grew wider and wider.

Rates were at their lowest last week on Wednesday morning. By Friday, some mortgage rates were higher by as much as 3/8 percent.

This week, with traders coming back to work, the pace of change should slow a bit, if not for the volume of closely-watched data expected to be released.

The data with the largest potential impact on mortgage rates this week is related to the housing market. There will be 3 separate reports -- each expected to show that housing is still weak, but not as weak as it was.

•Tuesday: Case-Shiller Price Index
•Wednesday: Existing Home Sales
•Thursday: New Home Sales

However, because real estate is local in nature and these reports are broadly national, it's important to not read into them too much. They're good for an overview but shouldn't be used as the basis for an offering price.

In addition, there will be two consumer confidence surveys released -- one on Tuesday and one on Friday.

Consumer surveys can be important in a recovering economy because as confidence rises, spending often does, too, and consumer spending represents two-thirds of the U.S. economic engine. If confidence is rising, expect the stock market to benefit and the mortgage bond market to suffer.

This would lead mortgage rates higher.

It's unlikely that mortgage markets will display the same volatility this week as compared to last week, but that doesn't mean that mortgage rates won't change. With so much data crossing the wires in the next 4 days, it's likely that Friday's rates will be different from today's.

Therefore, if you've found a rate and payment with which you can be comfortable, consider locking it in. It's unlikely to last long.

Looking Back and Looking Ahead: May 18, 2009

After a dreadful start to the month of May, mortgage markets improved last week, pushing mortgage rates lower overall.

It was the first week since late-April in which mortgage rates fell.

The biggest reason rates improved last week was because the economic optimism that was responsible for the stock market's 30% gain since March faded somewhat.

Retail Sales came in weaker-than-expected as did Initial Jobless claims. Both of these data points show that the economy may not be recovering as quickly as investors had wanted to believe.

Combined with gas prices ballooning more than 10 percent over the last 3 weeks, it's clear that consumer spending will be muted this summer and into fall.

Consumer spending is important because it accounts for two-thirds of the economy. If it's slowed for any reason, the economy is less likely to emerge from the current recession as quickly as had been anticipated.

This is good news for mortgage rates because a slow economy tends to draw investors out of stocks and into bonds, including the mortgage-backed kind. More mortgage bond demand leads to higher bond prices and, therefore, lower bond yields and mortgage rates.

This week, there isn't much data to watch and, because of Memorial Day, trading will be very light towards Thursday and Friday.

It's during "calm" weeks like this that mortgage rates can make huge movements up or down. With no official announcements against which traders can make bets, every piece of news is a surprise.

If you're still floating a mortgage rate, take some risk off the table by locking in this week.

Looking Back and Looking Ahead: May 11, 2009

Mortgage markets hit their worst levels since March last week, sending mortgage rates higher for the second week in a row.

Today's conforming mortgage rates are much higher than from the registered low point of April 30, 2009.

There are a few reasons why mortgage rates were up last week.

* Stress test results weren't as bad as originally feared
* The pace of job loss appears to be slowing
* The Dow Jones Industrial Average gained another 4 percent

Separately, bullet points like these can move markets and change rates. Together, though, they're a force.

The combination of events reinforces Wall Street's belief that the U.S. economy is on the mend. Even Fed Chairman Ben Bernanke remarked in his testimony to Congress that the economy should "turn up later this year".

As a result, this week, markets will be tuned in to inflation-related data.

Oil prices have been rising steadily since January and are up roughly 30 percent year-to-date. Because of this, Thursday and Friday's Producer Price Index and Consumer Price Index, respectively, will be closely watched. Both are a sort of "Cost of Living" measurement and are, therefore, susceptible to spiraling energy costs.

If either reading comes in higher-than-expected, look for inflation fears to ignite on Wall Street and mortgage rates to rise.

Similarly, if Friday's Consumer Sentiment Index reveals a more confident American consumer, mortgage rates are likely to rise in that scenario, too. This is because a confident consumer tends to spend more, thereby hastening the recession's end.

And, lastly, it's worth noting that six members of the Federal Reserve will be delivering prepared speeches this week, including Chairman Bernanke. When Fed officials speak, the markets can move quickly.

If you're still shopping for a mortgage rate, consider locking one in soon. Rates have been trending higher and there's little reason for them to fall.

Looking Back and Looking Ahead: May 4, 2009

Mortgage markets faced a broad sell-off last week, sparked by the Federal Reserve and consumer sentiment.

This caused mortgage rates to spike from Wednesday to Friday and it caused the "lowest rates of all-time" to seem like an opportunity lost.

It's the first time in 4 weeks that mortgage rates rose overall.

Last week was a strange week, to say the least. Aside from the large docket of economic data, there was also:

A Federal Reserve meeting
160 of the S&P 500 firms reporting earnings
A global public health emergency
It all combined to make for a volatile week in mortgages and the biggest losers were the people that hadn't yet locked a mortgage rates. Based on the current market, each quarter-percent that mortgage rates rose added $32 per month per $100,00 borrowed.

This week, the market should be similarly jumpy.

Early in the week, there's not much data to sway markets, nor is there much in the way of public policy. Therefore, expect external factors like the Swine Flu to dictate the market's path. If the outbreak's intensity grows, look for Safe Haven to lower rates much like it did last Monday.

Also, be aware and listen for Stress Test rumors.

Thursday, the government is expected to release its bank Stress Test results. However, history shows that markets often make large movements before news is ever official -- mostly on rumors. As a result, expect mortgage markets to carve out wide ranges on Tuesday and Wednesday in advance of the reports, making it very hard to "time" low mortgage rates.

And lastly, Friday brings us April's employment data. There's nothing the report can show us that we don't already know so the biggest risk here is that employment is not as bad as we all expect it to be.

If that's the case, stock markets will rally and mortgage rates will rise.

Like always, mortgage markets can change in an instant -- especially when there's outside influences on "normal" trading like we're seeing with Swine Flu and the Stress Test. If you're offered a rate and it fits your budget, consider locking right away. It may not last long.

Looking Back and Looking Ahead: April 27, 2009

Last week, like the 3 weeks prior, mortgage markets were all over the place from day-to-day.

But, also like the 3 weeks prior, when the week ended Friday, rates were right back where they started from Monday.

For the 4th straight week, mortgage rates started and ended the week essentially unchanged.

Whether or not this is good news depends on your perspective.

For active home buyers who have yet to find the "right home", long-term flatness like this is terrific. While interest rates stay even, buyer purchasing power holds flat and pre-approval letters stay valid.

For buyers under contract or homeowners looking to refinance, though, the market's pattern is a little more rough. Although rates are holding steady week-to-week, the day-to-day action is quite different. Bond markets are volatile and rate swings of a quarter-percent in a day have been common.

How good of a rate you get depends on day on which you shop. This complicates the process of "locking a rate" and makes it very hard for people trying to time a market bottom.

This week, though, the market may finally make a run and break its range.

Aside from it being an unusually data-heavy week, the Federal Reserve meets Tuesday and Wednesday to discuss monetary policy. The data combined with the Fedspeak may push the markets one way or the other towards economic optimism or pessimism for the latter half of 2009.

Lately, it's been a combination of the two -- a "cautious optimism" -- and that's a big reason why mortgage rates have held in a tight range for so long.

Understand, though, that when mortgage rates finally do move, they're going to move in a big way. So, if you're among the crowd looking for lower rates, the best possible outcomes you can hope for this week are:

* Weak consumer confidence data (Tuesday, Friday)
* Weak consumer spending data (Thursday)
* Falling "cost of living" calculations (Thursday)
* Fed concerns about deflation and/or recession (Wednesday)

Any of these four events would likely temper hope for a quick economic revival, sending mortgage rates lower. On the other hand, if confidence or spending is strong, or the Fed has no regard for deflation or recession, expect mortgage rates to rise.

Looking Back and Looking Ahead: Aptil 13, 2009

For the second week in a row, mortgage markets started the week strong and then ended with a fizzle. In the holiday-shortened week, rates were exactly flat overall.

There wasn't much economic data to move rates last week, incidentally. The market's up-and-down action was largely based on two events:

1. A reputable analyst said banking-sector optimism may be premature

2. Wells Fargo reported a record $3 billion in first quarter earnings

It was the first item that dropped rates Monday and Tuesday; the second item, in part, led them back up.

This week, data returns.

Tuesday, we'll get a look at Retail Sales. Because consumer spending accounts for two-thirds of the economy, a lower-than-expected figure for Retail Sales would dampen Wall Street's current optimism for the U.S. and that would likely lead mortgage rates lower.

Next, on Wednesday, the government will release a closely-watched "cost of living" measurement called the Consumer Price Index. At its roots, CPI is an inflation gauge for the economy so -- because inflation is bad for mortgage rates -- a higher-than-expected CPI number is expected to push mortgage rates higher.

Then, on Thursday, Housing Starts is released.

Housing Starts measures the number of new homes on which the nation's builders broke ground last month. If starts are up, it may mean that builders are optimistic for housing -- a good sign for the economy. However, if starts are down, it should help reduce housing inventory over the next few months -- also a good sign for the economy.

Meanwhile, 3 of the country's biggest financial firms -- Goldman Sachs, JPMorgan Chase, and Citigroup-- are due to release first quarter earnings this week. If the filings show strength like Wells Fargo's did, expect mortgage rates to rise like that did after the Wells Fargo report. What's good for stocks right now may prove to be bad for mortgage rates.

Goldman Sachs reports on Tuesday, JPMorgan Chase on Thursday and Citigroup on Friday.

Looking Back and Looking Ahead: April 6, 2009

Mortgage markets were up-and-down last week as rates fell Monday and Tuesday before surging higher from Wednesday through Friday.

In some cases, after touching all-time lows, conforming mortgage rates added a half-percent in the second half of the week, ruining some homeowners' chance to refinance.

It was the second week in a row that mortgage rates worsened.
One reason why mortgage rates are up is because investors are turning bullish on the economy, even as it sputters.

From investors' perspective, the data is weak, but not as weak as it has been -- or could have been. It's a glass-is-half-full approach and it's the opposite of how Wall Street worked in 2008.

For example, from last week:

1. Consumer Confidence measured a paltry 26.0 -- but the reading was up from February's all-time lows
2. The Case-Shiller Index showed a big drop in home prices -- but the report ignores strong housing data from the last 60 days
3. Unemployment rates reached 8.5 percent nationally -- but employment is a lagging indicator for the economy

In time, we'll learn whether investors were on-time or premature in their bets for an economic turnaround but, for now, the mere belief that the economy is improving is leading mortgage rates higher. And until Wall Street's sentiment changes, rates should continue in that direction.

This week, there won't be much chance to change traders' minds. For one, it's a holiday-shortened week. Secondly, there's just one release of importance to markets -- Wednesday's release of the March Fed Minutes.

Mortgage rates may not rise for the third week in a row this week but long-term momentum is working against rate shoppers. If you see a rate you like, consider locking it. Before long, it might be gone.

Looking Back and Looking Ahead: March 30, 2009

The stock markets made strong gains last week but the mortgage markets barely moved in the wake of the Treasury's "toxic asset" plan.

After carving out wide trading ranges on most days, mortgage pricing ended the week slightly worse overall.

From an economic standpoint, though, last week was an interesting one.

Existing home sales showed unexpected strength
New home sales showed unexpected strength
Data showed home prices rising unexpectedly
In addition, consumer confidence rose unexpectedly, too.

To rate shoppers, these "unexpected" developments are warnings worth heeding because mortgages trade on expectations of the future. And "the future", you'll remember was widely expected to be an economic abyss.

This is one of the many reasons why mortgage rates are so low right now -- during uncertain times, investors flock to safe investments. But when those expectations change, mortgage rates usually do, too.

And quickly.

Our current recession has been thus far called "housing-led" and was predicted to last several years. Last week's data, however, provides at least some evidence that the recession may be ending; that the economy may find its way forward sooner rather than later.

Indeed, even members of the Federal Reserve now call for a turnaround starting in as few as 6 months.

For now, market reaction to the unexpected data has been tepid. Therefore, watch for developments over the coming weeks and -- perhaps more importantly -- keep an eye on the investor mindset. If bond markets start to sell-off en masse, don't be surprised if mortgage rates race higher by quarter-point leaps at a time.

Meanwhile, this week, the biggest data release is Friday's jobs report. It's expected to show unemployment reaching to 8.5% with another 656,000 Americans losing their jobs in March. As before, if the data isn't as bad as expected, watch for stocks to rise and mortgage rates to go with them.

Looking Back and Looking Ahead: March 23, 2009

Mortgage markets scored huge gains last week, sparked by the Federal Reserve's pledge to buy $750 billion more mortgage-backed bonds in 2009.

Conforming mortgage rates fell on the week, overall, but not as much as they should have.

But Federal Reserve intervention wasn't the only good news for rate shoppers last week. New evidence showed -- for the time being, at least -- that the U.S. economy may be reversing direction:

* Homebuilders are breaking ground on new homes again
* First-time jobless claims are falling
* Inflation is present and, therefore, deflation is not

Should the economy continue trend stronger through the summer, it will likely fuel stock market gains, drawing cash away from mortgage bonds. This would lead mortgage rates higher -- perhaps for good.

Today's levels are artificially low, after all, supported by government intervention more than economic fundamentals. After the Fed's Wednesday afternoon announcement, rates fell to all-time lows before recovering sharply into the weekend on economic optimism and fears of inflation.

This week, the trend higher may continue.

In addition to the economic data set to be released this week, the U.S. government is expected to unveil its "toxic asset" plan Monday. If the plan includes issuance of new federal debt, inflation concerns will grow and that should lead mortgage rates up once more.

Some of the week's key events include Monday's Existing Home Sales report, Wednesday's New Home Sales report and Friday's consumer spending report, as well as President Obama's Tuesday evening address to the nation.

Rates can make huge changes from day-to-day and even from hour-to-hour. If you're shopping for a new home loan and find a mortgage offer that "fits", consider locking it right away. With so much news hitting the wires this week, the rate quote is likely to expire quickly.

Looking Back and Looking Ahead: March 9, 2009

Mortgage markets improved last week with investors' renewed aversion to risk. To the benefit of home buyers, as major stock indices touch 12-year lows, investors are moving investible cash to the bond market.

For only second time this year, mortgage rates ended the week lower than where they opened.

Some of the bigger stories that caused mortgage rates to fall last week included:

Unemployment reaching 8.1 percent nationwide
The Fed reducing its economic outlook for 2009
Investor concerns for blue chip General Electric
In addition, US Bank and Wells Fargo cut dividends by roughly 85 percent each. Both banks are considered well-run and positioned their respective cuts as a way to bolster balance sheets. Markets took it as a negative instead.

This week, there isn't much economic news upon which to trade, save for Thursday Retail Sales data. Therefore, markets will look for other clues about the future of the U.S. economy.

Tuesday, Fed Chairman Ben Bernanke has a scheduled speech on financial reform and then Thursday Congress takes up mark-to-market accounting. It sounds like a dry topic, but mark-to-market is the accounting rule that makes banks take losses on assets they've yet to sell.

Some experts think mark-to-market accounting makes the financial system appear weaker than it is so this is why Congress is starting a debate.

If mark-to-market rules are loosened, it would likely spell good news for the stock market and bad news for mortgage rates. In effect, money would flow in the opposite direction as it did last week.

For now, though, mortgage rates are low. If you're currently floating a mortgage rate with your lender, consider locking in. If there's even a whisper that mark-to-market accounting rules will change near-term, mortgage rates should rise.

Looking Back and Looking Ahead: March 2, 2009

Mortgage markets worsened last week, taking interest rates with them.

A steady drip of sour economic news plus concerns about the banking system outmuscled Fed Chairman Ben Bernanke's congressional testimony in which he said the recession would likely end later this year.

Overall, mortgage rates have risen in 9 of the last 12 trading days.

This week, it's unclear in what direction mortgage rates will go. However, it won't be because of a lack of action.

The week starts with the 8:30 A.M. ET release of the Personal Spending report, a closely-monitored report that should make a broad market impact. Economists expect that spending increased in February, providing key support for economy.

If economists are wrong, though, and spending fell, it will cast doubt on the speed at which an economic recovery will occur. Consumer spending, after all, makes up two-thirds of the economy. No spending means no recovery.

Next, on Wednesday, the White House is expected to release the details of the Homeowner Afflordability and Stability Plan. Again, markets are watching for the broader impact of the news.

If analysts and traders deem the plan effective, watch for stock markets to improve and bond markets to weaken.

This would cause mortgage rates to rise.

Then, Friday, we'll get to see February's official jobs number. Job loss is expected to exceed 600,000 for the month and unemployment may reach 8 percent. On many levels, if the jobs data meets the expectations, it would be okay with respect to mortgage rates.

As always, it's recommended that you float your mortgage rate cautiously. Wall Street is nervous for its turf and hyper-sensitive to Beltway influence. Markets can change in an instant and when they do, they usually change for the worse.

This week, have a game plan. It'll be easier to take advantage of daily mortgage rate movement.

Looking Back and Looking Ahead: February 23, 2009

Traders brushed off Tuesday and Wednesday's passage of the American Recovery and Reinvestment Act and the President's mortgage relief plan, respectively.

It showed how unsure markets remain about the stimulus package and its probable impact on the economy.

As a result, mortgage markets worsened last week, albeit slightly. It marked the 4th week out of five in which mortgage rates rose.

However, there were a few notable new items for American homeowners and home buyers last week:

The signed-into-law stimulus package includes a first-time home buyer tax credit

Additional banks joined the "no foreclosure" movement

Fannie Mae re-opened guidelines so that real estate investors can own and finance 10 properties, up from 4

Taken separately, these points aren't especially noteworthy. Together, however, they're very important.

In reducing the number of homes for sale while, in turn, spurring demand for them, last week's policy shifts should provide key support against falling home values nationwide. More buyers competing for fewer homes tend to make prices go up, after all.

This week, we'll see if buyers are responding. Two housing-related data points are released.

On Wednesday, it's January's Existing Homes Sales report. After soaring 6-plus percent in December, economists expect another big increase. This makes sense because falling prices make homes more affordable and banks are getting more efficient with selling foreclosed properties.

Then, on Thursday, the New Home Sales report hits the wires. It's expected to show little or no change.

As for mortgage rates, expect the same unpredictability we've seen since the start of the year. As Wall Street comes to terms with the various stimulus plans and the fate of our nation's largest financial companies, money will flow in and out of securities markets with fluidity and speed and that includes mortgage-backed bonds.

Rates should carve out a wide range this week. If you're not currently floating, consider locking in to avoid the risk of higher monthly payments.

Looking Back and Looking Ahead: February 17, 2009

In anticipation of a strong, government-led stimulus plan, mortgage markets improved with fervor early last week only to fizzle with equal speed as efforts fell short of expectations.

Neither the Fed, nor the Treasury nor Congress gave markets what they wanted.

Between Monday and Friday, mortgage markets were essentially unchanged, ending a 4-week slide. From day-to-day, however, rates were quite volatile.

The biggest shift of the week occurred late-morning Friday, in advance of the early-market closing. As the terms of the Congress' pending stimulus package became more clear, the piling-on of national debt suddenly spooked Wall Street, re-igniting traders' fear of inflation.

It's strange, in a way, because the final package represented fewer dollars than originally announced and markets had all week to come to terms with the government's three-pronged response to economy.

Nevertheless, traders saved their angst all for the last 90 minutes of the week. Fears of inflation led to a sudden and massive sell-off in all types of bonds, including the mortgage-backed kind.

Bond sell-offs are linked to higher mortgage rates, of course, and that caused mortgage rates to spike Friday afternoon.

This week, the selling is expected to continue but hope for reversal to lower rates is possible. It all depends on the news and it changes every day.

* Tuesday: Will GM and Chrysler's viability plans be rejected?
* Wednesday: Will the Fed's January meeting minutes show fear of depression?
* Thursday: Will Congress and the Treasury have clarified their respective stimulus plans?
* Friday: What will the Cost of Living index say about inflation?

There's news to make mortgage rates move up or down every day week. Unfortunately, unlike in the past when it was very clear what sort of news was good for rates or bad for rates, right now, it's not so apparent. There are so many expectations cooked in to the market already that it's hard to know what traders expect.

What we do know, though, is that markets are on edge and that can be dangerous for a mortgage rate shopper. Rates may fall by a lot this week on the right type of news. Or, they may rise by the same. We can't know for sure but we can know that -- historically -- rates remain low.

If you haven't joined the Refi Boom yet, this week may be one of your last chances. One bad bounce on Wall Street and we're back to 6 percent.

Looking Back and Looking Ahead: February 9, 2009

Despite a weakening employment outlook for Americans, the economy flashed signs of a rebirth last week. It wasn't enough to reverse the recent mortgage rate trend, however.

For the fourth week in a row, mortgage rates increased, if only slightly.

The biggest story of last week was the revelation that 2.5 million jobs have been lost since Labor Day. Strangely, this data may lead to two boosts toward a market recovery in the days ahead.

Monday, the Senate is expected to vote on an $820 billion stimulus package

Tuesday, Treasury Secretary Geithner is expected to outline a bank recovery program.

Both of these events figure to be heavily influenced by the number of out-of-work Americans and the pressure to restore confidence in the U.S. economy. We learned last week that Americans have moved from spenders to savers, after all, and in the absence of consumer spending, an economy is hard-pressed to expand.

In other words, rising unemployment is putting pressure on Capitol Hill and Wall Street thinks the final government plan will be good for business.

This is one reason why the stock market added 2 percent Friday just hours after the worst jobs report in 34 years. Traders are ever-hopeful. What it means for mortgage rates is a little less clear.

Never mind the data released this week, mortgage rates will be most influenced by news out of Washington. In addition to the Stimulus Package vote and Geithner's plan for the U.S. banks, Fed Chairman Ben Bernanke will testify Tuesday in front of the House Financial Services Committee.

In all, there's a lot for mortgage bond traders in which to sink their teeth this week and most of it is concentrated on Monday and Tuesday. Expect high levels of volatility and rapid changes in rates.

Unfortunately, we can't know if rates will be moving up or down so if you see a rate that fits your budget, consider locking it in with your loan officer. If rates rise, they're expected to rise quickly.

Looking Back and Looking Ahead: February 2, 2009

Consumer confidence reached an all-time low and 100,000 Americans were issued layoff notices last week, each playing a role in the mortgage market's relative worsening.

For the third consecutive week, mortgage rates rose and average loan fees increased, too.

Amid all of the negative economic news, however, there were two bright spots worth identifying and discussing. They show that country may be closer to economic recovery than expected.

First, the supply of "used" homes for sale fell from 11 months to 9 months nationwide. This suggests that homebuyers are re-entering the housing market in force, a signal that home prices are nearing equilibrium.

And, second, the nation's GDP -- a measurement of the country's complete economic footprint -- didn't fall by nearly as much as what the experts had predicted. A positive surprise like this makes us wonder about what else the Doomsday Economists may be wrong.

We won't have to wonder long.

With this week comes copious amounts of data, legislation and rhetoric to influence mortgage rates. Some of the news-bites that mortgage markets will digest this week include:

The Personal Consumption Expenditures Index report. PCE is a preferred inflation measurement and inflation is the enemy of mortgage rates. A high reading will pressure mortgage rates up.

Retail stores report on same-store sales.

The Pending Home Sales report. This notes the number of "homes under contract" and is a good gauge for buyer interest and the general health of housing.

20% of the S&P 500 firms will report earnings.

Congress is expected to vote on the Stimulus package.

The biggest impact on rates, however, could come on Friday with the release of January's jobs report. Employment data is always market-mover and with the press giving so much attention to layoffs lately, expect Wall Street to be extra jittery it.

Markets expect the economy to have lost a half-million jobs last month.

Looking Back and Looking Ahead: January 20, 2009

After a strong start Monday and Tuesday, mortgage markets suffered alongside stock markets in the latter half of last week, leaving mortgage rates higher on the week overall.

Market losses were especially steep Friday and mortgage rates headed into the long weekend on a strong uptick.

Regardless, the reasons that mortgage rates rose last week are ancient history, in most respects.

Today, the new presidential administration begins and economic expectations reset. Mortgage bond traders are now looking at Capitol Hill and wondering what the pending stimulus package will look like, and how many dollars will it include.

This is an important time for home buyers and rate shoppers, too, because stimulus is generally believed to be harmful to mortgage markets. This is for two reasons:

Stimulus draws money to the stock market from the bond market, pressuring bond prices down and, therefore, mortgage rates up.

Stimulus requires the "printing of money" which devalues the U.S. Dollar and everything denominated in it. This includes mortgage bonds and rates respond by rising.

In other words, as the scope of the stimulus package increases, it becomes more likely that mortgage rates will rise in 2009.

Aside from Beltway Politics and commentary, there isn't much to impact mortgage markets this week. We'll see the latest earnings from a handful of financial firms and tech bellwethers including Google, Microsoft and IBM. And, on Thursday, we'll be treated to some housing data from December.

But, with expectations set so terribly low for everything economic, markets will likely shrug off any data that doesn't scream that the recession is over. Instead, be on alert to lock a rate. In a changing political environment, mortgage rates can move quickly and it's best to be prepared.

The rate you're quoted in the morning won't likely be available by the afternoon.