The Week In Review (December 24, 2007): What To Watch For
By David Reznikow, CMPS
(Fairway Independent Mortgage)
Mortgage rates moved away from the best levels of the year last week with force, and this week could resemble last. Markets have been grappling with conflicting signals about the U.S. economy. On one hand, there is evidence of inflation in the form of higher cost of living. On the other hand, there is evidence of a recession in the form of hiring and housing slowdowns.Because market players had expected recession for so long, just the threat of inflation is enough to reverse markets. Inflation erodes the value of bonds and investors don't want to be caught holding too many of them. As mortgage bonds are sold, the extra supply drops their price. This causes mortgage rates to increase. On most weeks, new evidence of inflation would cause a gradual rise in rates. But this is no ord...
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