Stronger than expected economic data pushed mortgage rates a little higher again this week. Following a string of weekly drops since the middle of June, mortgage rates have now risen for two straight weeks.
Over the summer, mortgage rates have fallen substantially. Weaker than expected economic reports and the debt crisis in smaller European countries caused investors to reduce their forecasts for economic growth and produced a flight to the relative safety of government guaranteed bonds, resulting in the lowest mortgage rates in decades. Now, however, some investors are asking whether they can fall further. Weaker than average economic growth, low inflation, and an "unusually uncertain" economic outlook still make the current environment supportive of low mortgage rates, but some investors feel that these factors have been fully "priced in." These investors feel that economic growth must falter significantly for mortgage rates to drop much from here.
Also contributing to the fall in rates was the possibility that the government would take action which would push mortgage rates lower. The political climate has turned less favorable for this, though. Growing opposition to fiscal spending of any type has reduced the chances for additional government support for the housing market and mortgage rates. For more information and free mortgage advice, please e-mail: keith@frontstreetmtg.com.
Tight Lines,
Keith
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