The media is reporting that mortgage rates were “flat“ for the week. The price of Mortgage Backed Securities purchased by investors is what drives rates; higher prices equal lower mortgage rates. MBS prices closed on Friday at the exact same price as the week prior. The week, however, was anything but “flat.” It was marked with fluctuations and 2 wild swings in MBS price.

The week was based on uncertainty about the confirmation of Ben Bernanke, expectations of a strong 4th quarter GDP number, and the prediction that the Fed would not indicate any raise in interest rates.

Friday culminated a volatile week with counter intuitive action. Bernanke was confirmed, which led to confidence in Wall Street; The GDP numbers were even greater than expected, showing signs of stability; and a bond auction earlier in the week was met with tepid results, indicating the appetite was not strong fro long term secure investment.

What should have been a strong day for stocks and, inversely, a bad one for bonds started normal, but took a fast turn late morning. Concerns over worldwide stability, discussion of what was really driving the GDP numbers, and month end looming caused investors to sell off in the stock market and drive the price of MBS up. From late morning to end of day, we gained back everything we had lost during the week.

This week starts and ends with economic data that can shift markets in a hurry. I would be prepared for another rough ride. Stay in contact with your mortgage professional, as big swings are again possible this week.