Napa Mortgage News

Week Marked by Volatility

It was a volatile week in the financial markets and wild swings in stock prices caused equally wild swings in MBS prices and mortgage rates.  The net result was favorable for mortgage rates, which ended the week marginally lower once again, and they now stand at their lowest level since June 2013.

Concern about economic weakness in Europe, China, and other markets around the world has been the primary driver of the recent volatility. Investors fear that the weakness overseas will ultimately slow economic growth in the US.  

Adding to the concerns and uncertainty about the pace of economic activity is the Ebola scare.  Even though the number of reported cases in the US is miniscule, the impact on the economy could be significant if the fear of contracting the virus alters the travel and buying habits of the general public. It has already affected airline stocks, which saw their prices plunge this week.

Market volatility will likely continue, in the near term at least, as investors deal with these same issues. The economic calendar is light next week.  Existing Home Sales will be released on Tuesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Wednesday. CPI looks at the price change for finished goods that are sold to consumers. New Home Sales will be released on Friday.