This just in from our Morgage partner:
Mortgage markets improved last week with investors’ renewed aversion to risk. To the benefit of home buyers, as major stock indices touch 12-year lows, investors are moving investible cash to the bond market.
For only second time this year, mortgage rates ended the week lower than where they opened.
Some of the bigger stories that caused mortgage rates to fall last week included:
§ Unemployment reaching 8.1 percent nationwide
§ The Fed reducing its economic outlook for 2009
§ Investor concerns for blue chip General Electric
In addition, US Bank and Wells Fargo cut dividends by roughly 85 percent each. Both banks are considered well-run and positioned their respective cuts as a way to bolster balance sheets. Markets took it as a negative instead.
This week, there isn’t much economic news upon which to trade, save for Thursday Retail Sales data. Therefore, markets will look for other clues about the future of the U.S. economy.
Tuesday, Fed Chairman Ben Bernanke has a scheduled speech on financial reform and then Thursday Congress takes up mark-to-market accounting. It sounds like a dry topic, but mark-to-market is the accounting rule that makes banks take losses on assets they’ve yet to sell.
Some experts think mark-to-market accounting makes the financial system appear weaker than it is so this is why Congress is starting a debate.
If mark-to-market rules are loosened, it would likely spell good news for the stock market and bad news for mortgage rates. In effect, money would flow in the opposite direction as it did last week.
For now, though, mortgage rates are low. If you’re currently floating a mortgage rate with your lender, consider locking in. If there’s even a whisper that mark-to-market accounting rules will change near-term, mortgage rates should rise.