For just the second time in 2011, conforming mortgage rates in Raleigh fell on a week-to-week basis.
Rates shouldn't have dropped, though. Here's just a sampling of last week's economic data, all of which can be tied to rising mortgage rates:
- Oil prices are soaring on supply concerns
- The Producer Price Index touched a 2-year high
- Philadelphia Fed Manufacturing Survey predicted strong Q1 growth
Furthermore, the just-released January FOMC Minutes showed an improving economic outlook from members of the Federal Reserve.
Therefore, home buyers and rate shoppers might consider last week's rate drop a gift. Without the growing unrest in Libya, Egypt and Tunisia, mortgage rates would have moved considerably higher.
Instead, rates fell in a bout of what's commonly known as "safe haven" buying.
In safe haven buying, global investors shun risk in favor of safer investments; usually in response to market uncertainty. Terror threats is one such event. Regime overthrow is another. Because the event's long-term effect on markets is unknown, investors choose to move cash to safer asset classes until the future is more clear.
The extra demand for such assets drives prices up and, in the case of mortgage markets, drives rates down.
Last week, rates fell because safe haven buying was so strong. That may not be the case this week. As events play out across the globe, mortgage rates at home in North Carolina will be affected.
There's a lot of economic data set for release this week, including a large series of housing-related figures. Stronger-than-expected data should cause mortgage rates to rise, safe haven buying notwithstanding.
If you're still shopping for rates, or looking for a last chance to lock a low rate, now may be your best chance. Talk to your loan officer about a rate-locking strategy early in the week. As the situations abroad become more clear, mortgage rates should start to climb once again.
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