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A Good Week

After a horrible start to the month of May, mortgage markets (finally) improved last week, pushing mortgage rates lower overall.  It was the first week since late-April in which mortgage rates fell.

The biggest reason rates improved last week was because the positive conversation that was responsible for the stock market’s 30% gain since March faded.  Retail Sales came in weaker-than-expected as did Initial Jobless claims.  Both of these data points show that the economy may not be recovering as quickly as investors had wanted to believe.

What’s Bad News Have To Do With It?

These things combined with gas prices increasing more than 10 percent over the last 3 weeks, it’s clear that consumer spending will be slowed this summer and into fall.  Consumer spending is important because it accounts for two-thirds of the economy.  If it’s slowed for any reason, the economy is less likely to leave the current recession as quickly as had been considered.

This is good news for mortgage rate shoppers because a slow economy tends to draw investors out of the stock market and into bonds, including the mortgage-backed kind.  More mortgage bond demand leads to higher bond prices which means lower bond yields and mortgage rates.

Specifically, What Did Those Reports Say?

Each week, I put up an economic calendar of news coming out that following week.   Here’s the what actually happened with those reports last week:

What Impacts Mortgage Rates?

If you’re looking to purchase or refinance a home, it’s important to know what moves mortgage rates.  There are normally two major things that impact the direction:

1. Economic News.  (Like the calendar above).
2. International News. (major events, pending legislation, war related news, etc).
3. Stock Market. (Money flows from equities (stocks) to bonds when it seeks shelter).

What Are Rates Based On?

It’s been mentioned before, but as a common reminder – mortgage rates are only based on one thing.Mortgage Backed Securities (MBS).  The only way you have access to these is through live bond quotes.

Looking For Mortgage Rates?

If you’re looking for specifically what mortgage rates are doing, I’d be happy to help with a custom rate quote.  Each scenario is different (there are 27 different factors a mortgage rate is determined by).  If you or someone you currently know are looking for a mortgage, I’m here to help!

Information without obligation.  That’s my policy.  If you like what you hear, my team and I would love to help you out with your mortgage!