Despite economic tumult, mortgage rates held a very tight range last week. So far this morning, the story is the same. We have lost a little ground from Friday and even from earlier this morning, but overall, the impact will not be huge.
The economic factors that bear the most consideration are yet to come this week as the Consumer Price Index, a key measure of inflation, will be released on Wednesday. Higher inflation ruins the returns for investors that back mortgages. This causes rates to rise.
After continuing weak earnings reports from Wall Street, the fact that the Dow is holding steady is somewhat of an ominous sign for mortgages. Normally weak earnings would cause a decrease in the major indexes, but so far the Dow is actually up a bit this morning. A strong stock market hurts mortgage rates as more investors choose stocks as opposed to Mortgage bonds. Fewer buyers of these bonds forces sellers to lower their price which increases the interest rate.
Nonetheless, rates still look to be good this morning against the backdrop of the last two weeks. If the inflation readings from Wednesday are lower than expected, rates could fall. But a bet against inflation in times like these is probably not a safe one. Rates today will be very near their recent lows. It's a safe day to lock unless you are sure that the consensus estimate for a .3% rise in inflation is way too high. If you'd rather not concern yourself with such things, this is a safe morning to lock. Sure, rates may improve this week, but in general, they worsen on bad news much faster than they improve on good news. So since we're near historical lows, and there is volatile information ahead, its a lot tougher to regret locking as opposed to floating into a big storm and potentially getting burned.