Tuesday, Fed Chairman Ben Bernanke said the “recession is very likely over”.   The much better-than-expected  August Retail Sales Report adds support to Ben’s claim.

Stocks improved on the day and mortgage markets / rates worsened.

Could the days of super low mortgage rates be coming to an end.  Maybe.  Maybe not.

Since September, mortgage bonds markets have been in rally mode and mortgage rates have declined substantially.  Investors fled the relatively risky world of stocks and moved thier money into safer investments like cash and bonds, including the mortgage-backed kind.

Risk aversion is common when market uncertainty exists but last year’s aversion was so strong, by late-November, it had forced mortgage rates down to an all-time low. 

Since November, however, rates have been on the rise.  Stronger economic data and a general feeling of optimism and recovery have helped stock markets improve.  A lot of those gains are coming at the expense of low mortgage rates.

If you’re wondering what mortgage rates might do going forward, pay attention to Mr. Bernanke when he speaks.  If he sees economic recovery ahead, it’s probably going to happen.

It should move mortgage rates higher into 2010.

Posted by Scott Fowler.  Scott can be reached toll free @ 877-627-9211 x 104 or email SFowler@HorizonFinancial.org.  Visit Scott’s website @ www.ScottFowlerTeam.com.

Since falling to near 5% last week, 30 year fixed conforming mortgage rates have risen by almost .375%.

It’s a similar pattern we’ve seen over the last 10 months, rates drift down to near their “all-time lows”, and then surge higher over just a few days time.

Many people thought mortgage rates would break below 5%, but the market had other ideas.

Last month’s Producer Price Index exceeded expectations, too. 

A rising PPI is important to rate shoppers because if business costs are rising, consumer costs will eventually rise, too, as businesses share their expenses with American households.

This is inflationary, of course, and inflation is awful for mortgage rates.  It’s part of the reason why mortgage rates closed higher again Tuesday.

All year long, mortgage rates have been eratic and unpredictable.  Last week was no different and it’s why you shouldn’t necessarily try to time for a market bottom with mortgage rates. 

If an interest rate looks good to you today and the payment is manageable, consider locking it in.  In this market there’s no guarantees.

Posted by Scott Fowler.  Scott is a Partner, Sr. Loan Officer with Horizon Financial.  Scott can be reached toll free @ 877-627-9211 x 104 or email SFowler@HorizonFinancial.org . Visit Scott’s website @ www.ScottFowlerTeam.com .