Monday Mortgage Minute:

(Courtesy of Joe Massey, Castle & Cooke)

 

If you looked at the dramatic rise in mortgage rates last week, you might be tempted to believe that the economy is finally picking up steam. However, that is not the case. While we continue to have some positive economic news, the data still shows an economy in a slow recovery.

 

What appears to have changed is the market's perception of the future, and the market's expectation of coming Federal Reserve moves. While the Fed has not targeted a specific date, there is a growing sentiment that the Fed will begin to taper its monetary support programs sooner, rather than later. The Fed has stated

will begin removing supports once it believes that the recovery is becoming self-sustaining.

 

This week holds the potential to be either another brutal week for rates, or a reality check on where economy really is. If this week's economic data comes in better than expected, rates are very likely to push upward, especially if Friday's employment data is strong. However, if any of the Fed governors hint that the Fed isn't hurrying to reduce monetary support, rates could level out this week.