Nicole's Week in Review

Last week was another very volatile week for mortgage rates, which ended the week about .125% worse than where they began. This increase, followed by an increase in rates week before last, is an indication that rates maybe on a more permanent rise.

Why did rates increase? Firstly, the stock market did remarkably well last week; as a general rule, when the stock market does well, mortgage rates rise as money flows out of mortgage bonds and into stocks. Also, the CPI came in higher than expected last week, which indicates inflation (the archenemy of mortgage rates) may be on the horizon. And lastly, the Fed has begun to scale down its purchase of mortgage-backed securities. Its now averaging $14B a week in purchases, which is down from the $25B that its been averaging until recently.

Hate to say it, but all signs are showing rates are beginning to increase. Luckily, we are still at historic lows; however, I'd recommend moving quickly if you're seriously considering buying or refinancing a home before rates get much higher.

Forecast for the Week

This week shows no sign of relief from volatility as we have a pretty jam packed week of economic news.

We'll hear more about inflation on Tuesday with the Producer Price Index and Core Producer Price Index due out. We'll also hear more news on the housing front with Building Permits and Housing Starts on Tuesday, and Existing Home Sales on Friday. And lastly, we'll hear about unemployment with Thursday's Initial Jobless Claims Report.

All reports have the ability to move mortgage rates quickly, so if you're adverse to risk, I'd recommend locking your rate if you're happy with the payment it provides you.

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