Mortgage markets were up-and-down last week as rates fell Monday and Tuesday before surging higher from Wednesday through Friday.
In some case, 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:
- Consumer Confidence measured a paltry 26.0 — but the reading was up from February’s all-time lows
- The Case-Shiller Index showed a big drop in home prices — but the report ignores strong housing data from the last 60 days
- 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.
(Image courtesy: The Wall Street Journal Online)