Monday Market Commentary: This Week in Mortgage Rates

by Alex Stenback on March 21, 2011

[Opening Aside: The Mortgage market is selling off this AM as more of last week's "flight-to-quality" trade is being unwound, pressuring rates higher. The Treasury Department added some fuel to the fire when they announced they will be selling $10 Billion per month of their mortgage bond holdings - this also has put some immediate upward pressure on mortgage rates]

Last Week:
Mortgage rates finished the week about .25% lower than where they began, with most outlets quoting best-case 30 year fixed rates at or below 4.75%.

This was mostly a story about a flight to quality as events in Japan and elsehwere sent investors seeking security, and into our bond markets, which pushed rates lower. As mentioned last week, safe haven trades disappear as quickly as they come together.

Lost in last week’s chaos were some hints of inflation – increasing prices at both the consumer and producer level domestically, and the near-certain prospect of Chinese inflation. Neither are good long term signals for mortgage rates.

This Week:
Don’t be surprised if movement is headline driven again as stocks, bonds, and other markets react to news out of Japan, Middle East, and North Africa – some of you may already have headline fatigue, but the medium to long-term impact of these events is still uncertain. Follow me on Twitter to keep up with the intra-day swings and news.

On the calendar this Week: Existing Home Sales (Mon – already in, lower than expected), New Home Sales (Wed), Durable Goods Report (Thurs), Jobless Claims (Thurs), Consumer Sentiment and GDP (Fri.) Good news for the economy usually hurts mortgage rates/bad news usually helps.

This Week’s Economic Calendar [econoday]

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