Last week saw mortgage rates trending slightly further downward. The Federal Reserve again held interest rates steady, but changed their assessment of the economy. While its assessment is less positive than in previous meetings, the Fed appears to still have faith the economy will slowly pull itself out of this recession, but noted that "the pace of economic recovery is likely to be moderate for a time." So basically the FOMC downgraded its view of the economy and appears nowhere ready to tighten.
GDP was adjusted downward last week, and sadly, we're seeing evidence that the housing industry continues to struggle, with both existing and new home sales slowing. This is a very busy week of economic reports and data.
With a manufacturing-led economic recovery underway, the ISM Manufacturing Index will be very influential this week. If it only drops slightly, as expected, mortgage rates should hold fairly steady. Mortgage rates decreased last week as the economic data released continued to be weaker-than-expected.
On Thursday, long term fixed mortgage rates hit their lowest level in history. However, a larger drop in the ISM could push rates further downward. We end the week with the Employment Report. If the unemployment rate does climb, along with a net loss of jobs, we'll see rates trending downward as the week ends. Who knows? Maybe we'll see rates drop to 4% at no points.
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