Mortgage markets worsened last week on better than expected economic data, causing mortgage rates to rise. Last week was the third consecutive week that mortgage rates moved higher and, since touching a multi-month low in early-October, conforming mortgage rates are up by about a half-percent.
It’s likely rates will continue to rise, too. That’s because the same force that held rates down for so long is now the force pulling them up — expectations for the U.S. economy. Over the last 6 months, it wasn’t clear in what direction the country was headed. The housing sector has been gaining in strength, but the rest of the economy has been a question mark. Last week put an end to some of those questions:
- Retail Sales posted stronger-than-expected results
- Consumer Sentiment matched September 2008 levels
- Jobless and continuing claims fell below consensus estimates
Expectations for the U.S. economy are changing on the fly. As a result, stock markets gained last week and mortgage markets lost. This week, rates could move higher still. There are an unusually large number of key economic reports including on housing and inflation, plus a handful of speeches from key Federal Reserve members. With each positive announcement, mortgage rates should rise.
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