MORTGAGE MARKET COMMENTARY

Mortgage bond prices rose last week applying downward pressure on interest rates. A well bid 2-year Treasury auction on Wednesday and a weak durable goods data helped support bond prices. Trading conditions were "thin" with few participants active. For the week, interest rates on government and conventional loans fell by about 1/4th of a discount point.

Oil prices have risen considerably this year. The fear of escalating oil prices continues to pressure the American consumer and the US financial markets. Many analysts suggest that worldwide oil demand will only increase and argue that future oil price spikes are on the horizon.

Until oil prices gain some stability, there is a continuous threat of inflation. Play it safe during these times of extreme market volatility. It is better to be out of the market wishing you were in instead of being in the market and wishing you were out. A cautious approach to float/lock decisions remains necessary to take advantage of mortgage interest rates at their current favorable levels.

The employment report to be released on Friday will be the most important economic data released this week.