Mortgage Rate Increase:
Rates in the bond market ended last week considerably higher than where they opened, as optimism in the second half of the week outweighed some of the pessimism that presented itself on Monday and Tuesday. All told, the five year market moved about 15bps higher over the past week.
In the early part of the week, concerns about a Greek default and subsequent contagion remained the dominant theme in markets, but a trifecta of better than expected US employment reports that beat (modest) expectations gave cause for optimism that a double dip recession is not a certainty. A strong Canadian jobs report for September also added to the positive sentiment.
Additionally, plans emerged out of Europe that governments were going to undertake certain efforts to avoid a default by any member nations, but also a concrete plan to support the banking system if such an event were to take place.
In all, these developments present the global economy in better shape than what we thought at the start of the week, and the rise in mortgage rates reflects that change.