Mortgage markets were extremely volatile last week, carving out a wide range between Monday and Friday.

Thankfully for rate shoppers, the overall momentum was positive.

Mortgage rates fell for the second time in as many weeks. Rates still sit higher versus their early-October lows.

For pure “news”, last week was a busy one:

The Federal Reserve held the Fed Funds Rate near 0.000 percent
The Unemployment Rate crossed 10 percent
The First-Time Home Buyer Tax Credit was extended to April 2010
Combined, the 3 events reinforced the growing belief on Wall Street that the U.S. economy is in recovery, but not yet out of the woods. This particular philosophy has been excellent for mortgage rates, helping to hold conforming 30-year fixed mortgage rates near 5.250 percent since the start of the year.

It helped rates last week, too. But low rates aren’t without threats.

For one, the Fed’s vote to hold the Fed Funds Rate near 0.000 percent will eventually spark inflation concerns. When it does, mortgage rates will rise. That won’t be this week, though.

Actually, nothing may happen this week — there’s not much data to release. Apart from a retail report, a confidence survey and some Fed speakers, the calendar is bare. That, and Wednesday is a federal holiday.

However, without data, markets often trade on things like geopolitics, or energy concerns, or momentum. In other words, don’t be lulled into thinking rates won’t change this week.

At least for now, the mortgage rates look good. By the end of the week, that may not be the case.

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