Frank Nothaft Week Quotations

Mortgage rates remained fairly stable this week as the financial markets tried to discern just how quickly the economy is growing and how sustainable that growth will be.

Mortgage rates fell this week as a result of the Consumer Confidence report , which hit a 4-1/2 year low. Lower confidence translates into slower consumer spending. Less spending means less growth, and less growth means less inflationary pressure, keeping mortgage rates affordable.

Mortgage interest rates were up this week on news that February employment figures suggested an economic upturn. That news, however, puts a bit of upward pressure on long-term mortgage rates.

With productivity up and inflationary pressures muted, the Federal Reserve Board elected this week not to change a key short-term interest rate. Moreover, most other economic data releases, such as unemployment and manufacturing, painted a slightly negative picture for future economic growth. These factors combined to keep mortgage rates stable.

There was little activity during this holiday week to move mortgage rates one way or another,

There was no news this week that would drive mortgage rates in one direction or the other. Therefore, mortgage rates didn't have much reason to move a lot, staying below 7 percent for the second week running.

That said, January housing starts were the highest in over 20 years, and that is based on higher rates than we are currently experiencing, ... All in all, the little run-up in rates that occurred this week will not be enough to cause a significant slowdown in current housing market activity.

The Consumer Price Index released this week showed no decline, suggesting that the possibility of deflation is still low. Housing starts were stronger than expected, as were the leading indicators released today. All of these reports together could indicate the economy is ready to pick up growth.

The escalating tensions within the U.N. over the impending resolution on Iraq and dismal economic news this week sent the stock market tumbling and with it went bond and mortgage rates. The high volatility is likely to remain for a while. But since there are no upward pressures at the moment, any sustained rise in rates in highly unlikely.