Buckle in for another bumpy ride this week!  On Friday, news that AMBAC, a major bond insurer, would receive a bailout caused mortgage rates to rise sharply.

The only economic report for today, Existing Home Sales, came in slightly higher than expected.  Even though the sales and prices trends continue downward, the analysts expect certain levels.  The markets trade on these expectations preemptively so when the results differ from expectations the markets adjust.  If, like today, the data was slight better than expected, it is generally good for stocks and bad for mortgage rates.

This is exactly the case this morning as Mortgage Backed Securities, the bonds that set mortgage rates, are moving much lower in price.  A lower price = a higher yield which = a higher interest rate.

The economy is concerned about inflation and also looking for signs of a turnaround.  Any positivity later this week will continue to push rates higher.  There is an important report that speaks to inflation tomorrow.  If it continues the trend of negative inflation data we've received over the past several weeks, rates will suffer from that as well.

The best thing we can hope for is that the AMBAC announcement is less impactful than expected, in inflation data is moderate, and the economic reports point to weak growth.  It's always bittersweet to hope for bad economic news, but if you are shopping for a mortgage, this is what you want.

Do not expect rates to be anywhere remotely close to where they were a month or even a week ago.  After today, we should be almost a full percent higher than we were late January.  The economic data and sentiment would indicate that locking a rate now is the safe bet as we appear to be trending upward.  However, if one simply looks at the curves created by bond numbers, we may be in for a little relief based on historical data over the past months.  The only dark horse there is inflation.  it was not much of a concern as the economy has been languishing.  Now that it seems to be a problem, the trend may not be valid.  So the safest bet is to lock.  If you want to wait for tomorrow's inflation data, be prepared for a big swing in one direction or another.