Mortgage markets improved last week on renewed concerns of a European debt default, and Federal Reserve rhetoric.
Conforming mortgage rates in NJ dropped on the news, one week after posting a 5-month high.
A major strike in Spain and growing unrest in Italy, both in opposition to recent austerity measures, have re-ignited fears that the Eurozone may lapse into recession.
These are similar beginnings as with last year’s events in Greece. The difference is that Spain and Italy represent a larger share of the Eurozone’s overall economy, and a debt default could trigger faster contagion.
Mortgage markets gained on the news in a bid of safe haven buying.
Bonds also gained as Federal Reserve Chairman Ben Bernanke clarified his position on the economy with respect to Fed-led stimulus. Summarized, he said that the Federal Reserve is inclined to keep its accommodative policies in place until the labor market is more fully recovered.
In addition, Chairman Bernanke alluded to making direct mortgage market intervention if U.S. economic growth were to stall in the near future.
The news helped push mortgage rates back below 4.000 percent last week, according to Freddie Mac’s weekly Primary Mortgage Market Survey. The average 30-year fixed rate mortgage rate fell to 3.99% for applicants willing to pay an accompanying 0.7 discount plus closing costs.
1 discount point is equal to one percent of your loan size.
This week’s mortgage market activity will be holiday-shortened so expect volatility — especially surrounding Friday’s March Non-Farm Payrolls report.
More commonly called “the jobs report”, Non-Farm Payrolls details national employment rates and gains or losses in the workforce size. Lately, what’s been good for jobs has been good for the economy so if the actual number of jobs created exceeds the 200,000 projected by economists, or if the Unemployment Rate drops off its current 8.3% reading, look for mortgage rates to rise.
In general, economic expansion is bad for mortgage rates throughout Brooklyn and the nation.
Other market-moving news this week includes Tuesday’s FOMC Minutes release and Thursday Jobless Claims data.
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