Mortgage rates were largely unchanged last week, ending a three-week winning streak that saw mortgage rates drift lower from a short-term high in March. Conforming mortgage rates rose slightly according to the weekly Freddie Mac Primary Mortgage Market Survey. Nationwide, the 30-year fixed rate mortgage rate climbed 2 basis points to 3.90%. This rate was available to homeowners willing to pay 0.8 discount points and a full set of closing costs (1 discount point is equal to 1% of the loan amount). Prior to last week’s survey, just 0.7 discount points were required.
This week mortgage rates are expected to be more volatile thanks to economic data releases and the ongoing European debt crisis. The Federal Reserve’s Federal Open Market Committee is scheduled for a 2-day meeting this week as well.
On the data front, the week starts with Tuesday’s Consumer Confidence figures and the government’s New Home Sales report. Both have the power to move mortgage rates. The week then concludes with the Pending Home Sales Index; the GDP release; and a series of Treasury auctions.
With respect to Europe, demand remains strong for debt from Spain and Italy, but at much higher rates compared to several weeks ago. Like Greece in 2011, both nations are feared to be at high risk of default on their debts. Fears of sovereign default in Europe is positive for mortgage rates in the US because it often results in a flight to the relative safety of US debt. The increased demand for US debt tends to push down interest rates.
The Federal Reserve will make a statement to markets Wednesday afternoon. The Fed is the nation’s central banker and its post-meeting press releases have tremendous influence on bond markets and mortgage rates.
After some serious volatility in March, the relative placidity of the mortgage markets the past few weeks has been a welcome change. That said, it shouldn’t be forgotten that volatility can return with a vengeance. Mortgage rates are wound tight and probably have more room to rise than fall.
If you have a mortgage deal you like, I urge locking it in so you don’t need to worry about what’s going on with interest rates.