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What’s Ahead For Mortgage Rates This Week : February 28, 2011
Mortgage markets improved last week as Wall Street’s concerns about the Middle East trumped its fears of inflation. Conforming and FHA mortgage rates in AZ fell to a 3-week low. Last week marked the second straight week in which mortgage rates fell, a streak that follows four straight weeks of climbing mortgage rates. It’s been a bout of good fortune for rate shoppers and home buyers. In addition, according to Freddie Mac’s weekly mortgage rate survey, the average spread between conforming 30-year fixed rate mortgages and 5-year ARMs has widened further. The two benchmark products are now separated by 1.15%. It’s the largest interest rate gap in recent history; one that yields a monthly payment difference of $68 per $100,000 borrowed. This week, it’s unclear in what direction mortgage rates will go. On one side, there’s ongoing unease related to protests in Libya and its neighbors, and that’s driving safe haven buying. “Safe haven buying” describes when investors flee risky situations and put their money in the safest places possible. Mortgage bonds are one such place, so when safe haven buying is in effect, bond demand is high so bond yields (i.e. mortgage rates) fall. On the other side, inflation is ramping up. Recent ... more

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