Mortgage Rate Outlook: 5% with +/-.25% trading range

Including today, we’ve had 3 days of higher mortgage bond prices, which has brought rates back down to 4.75% (for a 30yr fixed single family home loan up to $417,000; higher loan amounts and condo loans are higher), but markets have lots of data to digest on this holiday-shortened trading week.

Wednesday brings the third of three 3Q2010 GDP readings and November existing home sales. Thursday we have three key November reports: personal income and spending, the Fed’s favorite consumer inflation measure (PCE Index), and durable goods. Since trading will be thin due to vacations, this data will create even more than normally high volatility, and if the data suggest better economic conditions and inflation, rates will tick up again. Our prediction remains that rates remain near 5% with +/-.25% trading range for the coming weeks.