Mortgage rates change from day-to-day, but last week's volatility was a record-breaker. After drooping through Tuesday and then skyrocketing Wednesday and Thursday, mortgage rates retreated slightly on Friday.
By weeks' end, rates were at their same levels from mid-December.
This is in contrast to Tuesday, just after the Fed's rate cut and before the stock market rally. Mortgage rates had been touching near four-year lows for some home loan products.
This week could be equally hectic because heavy economic data is hitting the wires, and because the Federal Open Market Committee is meeting.
The major activity gets started Tuesday with the Consumer Confidence report.
Markets care about this survey because recessions tend to be self-fulfilling prophecies -- if people believe it will happen, it generally does. Therefore, if average Americans are feeling worse about the economy, it may cause stocks to sell-off to the benefit of mortgage rates.
Notice from the graph above how confidence plunged through the second half of last year.
On Wednesday, the FOMC adjourns from its two-day meeting.
What the Fed does will not be as important as what the Fed says. Markets will dissect the FOMC's press release for clues about our economy's strength. If the statement cautions about dramatic weakness in the economy, expect mortgage rates to fall on the absence of inflation.
Then, on Thursday, markets get treated to the Personal Consumption Expenditures report. The PCE is a Cost of Living index and is the Federal Reserve's favored inflationary report. If "normal living expenses" are increasing, it should create upward pressure on mortgage rates.
And lastly, on Friday, the Bureau of Labor Statistics releases the jobs report for January.
Markets are expecting an improvement on December's figure and if that adjustment is greater than expected, mortgage rates will rise on the belief that the economy is not as weak as previously reported.
It will be a busy week like last week so it pays to think in terms of "payment" instead of "rate". If you're in the market for a mortgage and your proposed payment is within budget, consider locking in advance of this data-laden week.
(Image courtesy: The Wall Street Journal Online)
