Mortgage markets were volatile last week, making it very difficult to shop for mortgage rates. On most days, lenders issued multiple rate sheets with the trend putting rates higher in the morning, and lower in the afternoon. Overall, mortgage rates were unchanged on the week. It broke a three-week streak through which mortgage rates rose. Rates remain roughly one-half percent higher than the lows of early-October.
The biggest positive for rate shoppers last week was tame economic data — specifically concerning the Producer Price Index and the housing sector. The Producer Price Index is an inflationary, Cost of Living-like measurement for businesses and it went negative in September. Analysts weren’t expecting that and the surprise pulled rates down an eighth. Similarly, in housing, both the Home Price Index and Housing Starts figures were softer than expectations. These, too, tugged mortgage rates down. At least temporarily.
We say “temporarily” because — all week long — a steadily-weakening U.S. dollar was leading mortgage rates higher. All things equal, mortgage rates rise as the dollar loses value and, last week, the dollar touched a 14-month low versus the Euro. The greenback’s weakness countered most of the “positive” news for rate shoppers and is a major reason why rates were so volatile. The volatility should continue into this week, too. With little data and no Fed speakers, look for mortgage rates to move with the market’s momentum. Lately, momentum has been pulling rates higher so if you’re floating a rate and trying to time a bottom, the chances are good that we already passed it. Consider locking your rate before rates rise much further. Once rates break 6 percent, they may not come back down.
