Good-quality well underwritten mortgages finally got a big government boost last week. The Federal Reserve announced plans to by $100 billion in Freddie and Fannie debt along with $500 billion for purchasing agency-backed mortgage backed securities. The announcement was cheered by analysts and financial markets, with stocks rising all of last week and long term conforming mortgage rates moving downward significantly. Adding to the downward pressure on rates was a revised GDP number of -0.5%, reminding markets that we are indeed in a challenging period.
Mortgage rates may continue to remain low as we head into another week of data that is almost certain to contain more news of a souring economy. Both ISM indices are due this week with expectations of drops in both manufacturing and services. Monthly employment data is also due.
If we lose anywhere near the 300K jobs expected to have been lost in November and the unemployment rate ticks upward we could see rates continuing to trend downward into next week.