The short holiday week brought a flurry of economic reports last week. Highlights included pending home sales, the S&P Case-Shiller Housing Market Indices and the FHFA home price index. No reports were released on Thursday and Friday in observance of the Thanksgiving holiday.
In a week of up-and-down trading, mortgage markets improved for the second consecutive week last week. Weaker-than-expected jobs data plus evidence of a slumping Eurozone took mortgage bonds lower, capped by a furious Friday morning rally that dropped mortgage rates to near-record levels.
Once again, volatility ruled the bond markets.
Tuesday afternoon, after the release of the Fed March Minutes, mortgage rates spiked. Some products climbed as much as 0.250 percent. The surge stemmed from the Fed Minutes showing Federal Reserve members hesitant to begin new rounds of market stimulus without a demonstrated, national economic slowdown.
Wall Street hadn’t expected the Fed’s verbiage to be so well-defined. With little evidence that such a slowdown was underway — the economy has shown two straight seasons of consistent, steady growth, after all — equity markets rallied and bond markets sunk, causing Seattle mortgage rates to rise.
By Wednesday, however, rates had started to fall.
Civil unrest in Spain plus concern that the nation will fail to meet its debt obligations drew global investors away from equities and into the relative safety of U.S. government-backed bonds — including mortgage-backed bonds. This is a common investment pattern during times of economic uncertainty and one of the major reasons why mortgage rates have been so low, for so long.
If the scenario in Spain sounds similar to what transpired in Greece between mid-2010 and late-2011, that’s because it is. Mortgage rates in Washington may benefit in the medium-term.
Also helping interest rates last week was the March jobs report.
The U.S. government reported 120,000 net new jobs created in March, well short of the 200,000 figure that analysts expected. Interest rates improved on the news, giving rate shoppers another chance to capture low rates.
This week, with the economic calendar light, look for Europe to dictate market action. Mortgage rates may move lower but there’s more room for rates to rise than to fall as rates remain near all-time lows.
For rates and closing costs specific to your situation visit our Interest Rate Quote tool or call 425-401-8787 and speak with an experienced loan professional from Sammamish Mortgage.