At the time I am writing this, mortgage interest rates are less than 1/8th of a percent higher than they were last Friday.
There was a lot of financial news this week. The Federal Reserve Board (FED) had their Federal Open Market Committee (FOMC) on Tuesday and Wednesday. After the meeting they came out with a policy statement. Their statement said that the economy is still not growing at the pace they want to see so they will continue their assets purchase program to try and stimulate the economy. This is good news for interest rates since they are purchasing mortgage bonds which causes interest rates to stay low. Another topic brought up in their statement was deflation. Up until this point there has been concern that the continued printing of money would cause inflation, but now that concern has flipped. Deflation means that goods are becoming less expensive compared to the dollar. This might sound like a good thing, but it can actually cause problems in the economy.
Yesterday the European Central Bank(ECB) lowered their base lending rate from 0.75% to 0.5%. At this point most of the Euro zone is back in a recession and the lowering of the rate is an attempt to stimulate the economy.
This week was employment week with the unemployment claims on Thursday and the employment report on Friday. The unemployment claims figure showed that claims dropped 18K. The employment report showed that unemployment rate dropped to 7.5% from 7.6% rate. The job creation numbers were stronger than expected especially since the ADP estimates earlier in the week were low. The report was a surprisingly strong report compared to most other economic report lately that have been showing the economy softening. This was a setback for rates, but I believe we might see more negative reports next week which will help out rates again.
