Nicole's Week in Review

Happy Monday everyone! I hope you had a great Halloween weekend -- I sure did playing with the cutest 2 year olds on the planet! Here's last week's recap, and a preview of what's to come this week.

Mortgage Rates

It was another volatile week for mortgage rates, so depending on when you locked your rate, you could see a difference of about .125%. Overall, the week ended only slightly better than where it began, but depending on your lender's margins, you may/may not have seen that improvement passed on in the form of a lower interest rate. This morning's bond prices opened slightly lower than where they ended Friday, so you may see an increase of about .125% to your rate, if at all.

Last Week's News

The big news last week was 4th Quarter GDP went up 3.5%. Media outlets were buzzing with excitement saying this is a sign the recession is over. However, its important to note that Cash for Clunkers played a big role in our GDP. Some estimate once Cash for Clunkers is taken out of the equation, our GDP is closer to 1.9%.

Another big headline is the possible extension of the $8,000 first-time home buyer tax credit. The extension is not official yet, but the latest version I saw floating around would extend the $8,000 tax credit to first-time home buyers until April 2010, AND open it up to non-first-time home buyers up to $6,500 (read full details of the proposal here). The House and Senate still need to come to an agreement on the final bill, but it looks like some form of an extension will be passed.

Forecast for the Week

The Federal Open Market Committee holds a two day meeting this week with its Rate Decision and Policy Statement due out Wednesday. Friday is another big day with Initial Jobless Claims and the Jobs Report due out. Friday has the potential to have a big affect on mortgage rates as the unemployment rate will be announced (currently sitting at 9.8%) Generally speaking, bad news for the overall economy is good for mortgage rates (and visa versa). The stock market has been fueled lately by companies' higher earnings (perhaps by cost-cutting measures in the form of layoffs), and mortgage rates have risen. It will be interesting to see how mortgage rates will react to our jobless recovery.

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