Last week marked the second straight week in which mortgage rates fell, a streak that follows four straight weeks of climbing mortgage rates.
Itâ€™s been a bout of good fortune for rate shoppers and home buyers.
In addition, according to Freddie Macâ€™s weekly mortgage rate survey, the average spread between conforming 30-year fixed rate mortgages and 5-year ARMs has widened further.
The two benchmark products are now separated by 1.15%. Itâ€™s the largest interest rate gap in recent history; one that yields a monthly payment difference of $68 per $100,000 borrowed.
This week, itâ€™s unclear in what direction mortgage rates will go.
On one side, thereâ€™s ongoing unease related to protests in Libya and its neighbors, and thatâ€™s driving safe haven buying.Â
â€œSafe haven buyingâ€ describes when investors flee risky situations and put their money in the safest places possible. Mortgage bonds are one such place, so when safe haven buying is in effect, bond demand is high so bond yields (i.e. mortgage rates) fall.
On the other side, inflation is ramping up.
Recent economic data shows that the economy is expanding, and the Federal Reserve is maintaining itsÂ accommodativeÂ growth policies. Therefore, this week, the key economic event will be Fridayâ€™s jobs report.Â if job creation is high, expect inflation fear to re-ignite, and mortgage rates to rise.
Another risk factor for this weekâ€™s rate shoppers is that tensions begin to settle in the Middle East, or that Wall Street gets more comfortable with rising oil prices. If that happens, safe haven buying will subside and mortgage rates will resume rising.
There appears to be more reasons for mortgage rates to rise this week than for them to fall. Plan accordingly.
If you have not locked a mortgage rate yet, this week may represent your last chance to get a low one. Talk to your loan officer and make a plan.
Provided by: Ryan Shoemaker, Mortgage LoanÂ Officer,Â www.mortgagerundown.com