What's Ahead For Mortgage Rates This Week : December 10, 2012

Mortgage bonds worsened last week as Fiscal Cliff talks moved closer to resolution and as the U.S. economy showed continued signs of growth.

Conforming mortgage rates in Florida rose slightly, edging off the all-time lows late in November.

According to Freddie Mac's weekly mortgage rate survey, the average 30-year fixed rate conforming mortgage rate was 3.34% last week for home buyers and refinancing households willing to pay 0.7 discount points at closing plus a full set of closing costs.

Freddie Mac also showed the 15-year fixed rate mortgage averaging 2.67% with an accompanying 0.7 discount points plus closing costs.

1 discount point is equal to 1 percent of your loan size.

The two big stories that moved rates worse last week were the Fiscal Cliff talks and the November jobs report.

With respect to the Fiscal Cliff, mortgage rates worsened as Capitol Hill moved closer to a deal which would avoid the dual-event of expiring U.S. tax break and a mandated government spending rollback. These events are both scheduled to occur December 31, 2012. 

Some analysts believe that these two events -- in unison -- could slow U.S. economic growth to the point of recession. Other analysts aren't so sure. However, Wall Street is choosing to be cautious. This is why a break in talks has been good for mortgage rate shoppers of late; and why steps toward avoiding one or both scenarios has been bad for rate shoppers.

Mortgage rates often rise when economic growth is expected. This explains why November's jobs report pushed mortgage rates worse Friday, too -- Wall Street underestimated the Non-Farm Payrolls report which showed 146,000 net new jobs created, and didn't expect to see the national Unemployment Rate drop to 7.7%.

This week, mortgage rates may rise again with new inflation data and a Retail Sales report set for release.

The big event, though, is the Federal Open Market Committee's 2-day meeting scheduled, set to begin Tuesday. The FOMC is not expected to add new economic stimulus, but the Fed's words can carry as much weight as its policies and actions.

The Fed will issue a statement to the markets at 12:30 PM ET Wednesday, and will host a press conference shortly thereafter. Mortgage rates are expected to remain volatile all week.

A Look At This Week's Mortgage Rates : December 3, 2012

Low mortgage rates are pumping up home affordability.

Average 30-year fixed-rate mortgage rates made a new all-time low in November, continuing this year Refinance Boom and giving fuel to the budding housing market recovery.

At month-end, Freddie Mac's survey of 125 banks nationwide put the benchmark product's rate at 3.32% for borrowers willing to pay 0.8 discount points. This is just 0.01 percentage point above the record-low rate establishing prior to Thanksgiving.

The 15-year fixed mortgage is similarly low, posting 2.64 percent nationwide, on average. This, too, is only slightly higher the all-time low set the week prior.

Falling mortgage rates have helped to offset rising home prices in many U.S. cities. 

Steady job creation and rising consumer confidence has swelled the pool of home buyers nationwide, causing home inventories to shrink and home prices to rise. The improving economy has also led to rising rents and now, within many housing markets, it's less costly to buy and own a home than to rent a comparable one.

A $1,000 mortgage payment affords a $225,000 mortgage payment in Orlando.

Last week, the economy was shown to be improving.

• The Commerce Department showed that the Gross Domestic Product increased at a 2.7% annual rate in Q3 2012
• The Labor Department showed first-time unemployment filings dropping by 23,000 claims
• The Pending Home Sales Index jumped to its highest point since April 2010
• The Existing Home Sales report showed home sales up 2.1%
• The Case-Shiller Index showed home values making annual gains 

In addition, Federal Reserve Ben Bernanke said that the central bank will take action to speed economic growth, should the U.S. economy start to side-step. 

This week, there is little on the U.S. economic calendar, save for Friday's Non-Farm Payrolls report. Wall Street is expecting to see 80,000 net new jobs created in November, and a rise in the national Unemployment Rate to 8.0%.

If the report's actual results are stronger-than-expected, mortgage rates will likely climb from their all-time lows. If the report comes back weak, rates should stay unchanged.