Mortgage rates fell slightly in a week that included a bank failure, more oil price spikes, and questions about the health of the nations' mortgage market. Rates would have fallen more if not for a late-Friday sell-off that added 0.125 percent to most products.
As financial markets fell under stress, most people missed the strong points that emerged about the U.S. economy last week:
- Fewer Americans filed for unemployment benefits
- Wal-Mart reported stronger-than-expected sales
- Consumer confidence rose for the first time in 7 months
And, also worth noting: homes under contract slipped but remained above the lowest levels of the year, suggesting a potential housing floor.
But, the biggest story of last week was the stock-price collapse and subsequent pressure on Fannie Mae and Freddie Mac. It should be the biggest story of this week, too.
So far, Fannie and Freddie's issues appear to be more psychological in nature than fundamental, but to an already roiled market, negative perception can quickly become reality. This is one of the biggest reasons why both the Federal Reserve and the U.S. Treasury made public statements Sunday in support of Fannie and Freddie, and in advance of the Asian markets' opening.
Other events that may move markets this week include Retail Sales data on Tuesday, consumer inflation data on Wednesday, and Ben Bernanke's two-day testimony to Congress which takes place over, both, Tuesday and Wednesday.
It's unclear in which direction mortgage rates will go, but because the markets are on-edge, expect rate movements to be sharp and quick. In other words, if you're in the market for a mortgage this week, and you see a rate and payment you like, don't mess around with it -- just get it locked.
(Image courtesy: Wall Street Journal Online)
