Frank Nothaft Markets Quotations

Mortgage rates remained fairly stable this week as the financial markets tried to discern just how quickly the economy is growing and how sustainable that growth will be.

Over the last couple of years, we've seen many markets with strong home value appreciation. They're up at a considerable pace in many markets across the country, particularly from New England all the way down to Washington, D.C., ... Home values are up in D.C., for example, by over 10 percent over the past year. That means families have built up home equity.

Financial markets are feeling more confident that the Fed will not raise rates any time soon. Add to that the fact that recent economic data shows core inflation is less than the market expects, and we see mortgage rates drop once again.

Following the onset of the Iraqi conflict, financial markets seem to have an upward bias for mortgage rates. However, that's not to say that uncertainty has diminished in any large way, but that it has shifted to a different set of unknowns.

Consumer spending has kept the economy moving, and when initial holiday sales were better than expected, financial markets reacted with enthusiasm. It was this potential pick-up in the economy that caused interest rates, including mortgage rates, to drift upwards this week.