Mortgage markets remained highly volatile for the second straight week last week. Yet, over the course of 5 days, mortgage bonds ended the week relatively unchanged.

Conforming rates worsened Monday, Tuesday and Wednesday — rising as much as 3/8 percent as compared to the week prior — before settling lower through Thursday and Friday.

On the week overall, 30-year fixed rates worsened, 15-year fixed held steady, and 5-year ARMs improved.

And despite all the data released last week, it wasn’t the fundamentals that were causing rates to move. Instead, Wall Street was firmly focused on the Federal Reserve’s scheduled 2-day meeting this week; preoccupied with the likelihood of new Fed stimulus program.

The Fed’s meeting adjourns Wednesday and the group is widely expected to announce a new round of bond market support at that time.  Uncertainty over how big that package will be, however, is what’s causing rates to jump.

Market estimates range from $250 billion to over $1 trillion and when Wall Street expectations shifts toward the lower end of that range, mortgage rates have been rising. When expectations shifts toward the upper range, mortgage rates have been falling.

This is why it’s all eyes on the Fed this week. Once the Fed adjourns, there’s no more “expectation” — there’s only Fed commitment.

Other than the Federal Reserve’s get-together, there isn’t much new data due for release. The week’s calendar looks like this:

• Monday : Personal Income and Spending reports
• Wednesday : FOMC adjourns from its 2-day meeting
• Thursday : Initial and continuing jobless claim data
• Friday : Pending Home Sales, Jobs Report, Unemployment Rate

It’s unlikely that data will swing mortgage rates until after the Fed’s Wednesday adjournment, but, once that happens, expect bond market attention to shift to the October jobs report set for 8:30 AM ET release Friday morning.  If jobs data is strong, mortgage rates should rise.

All things considered, it’s dangerous to float a mortgage rate this week. If you’re not already locked, talk to your loan officer prior to Wednesday afternoon.

Foreclosures are a big part of the housing market, with distressed properties accounting for 35 percent of all home resales last month, according to the National Association of REALTORS®.

But for as common as foreclosures can be, they remain a localized concern. Data from foreclosure-tracking firm RealtyTrac shows that more than half of last quarter’s foreclosures came from just 19 metropolitan areas, with the Miami-Fort Lauderdale are accountable for the largest number of filings.

A “foreclosure filing” is defined as a default notice, scheduled auction, or bank repossession.

On a per-household basis last quarter, the Las Vegas area was hardest hit. 1 in every 25 households received some form of foreclosure notice.

The RealtyTrac report features other interesting figures, too:

• California, Florida, Arizona and Nevada account for the top 10, and19 of the top 20 metro areas for foreclosures
• Compared to Q3 2009, foreclosure activity dropped in 72 metro areas, including No. 2 Cape Coral/Fort Myers, FL
• Foreclosure activity dropped 1 percent from Q3 2009 in the nation’s 20 most-populated cities

And, despite a 27 percent increase in foreclosures from the second quarter, Utica/Rome, NY posted the lowest foreclosure rate in the nation — 1 for every 8,003 households.  The next closest city, Charleston, WV, posted 1 for every 2,600 households, by comparison.

Foreclosures, like everything in real estate, are local. And buying them is “different” from buying a typical home resale. If you’re planning to buy a foreclosed home, speak with a real estate agent with specific experience with homes in foreclosure. Professional advice is helpful.

In the same week that the National Association of REALTORS reported home resales up 10 percent in September, the U.S. Census Bureau reported similarly strong results for the new construction market. 

After improving 1 percent in August, New Home Sales popped another 7 percent in September.

It’s no wonder homebuilder confidence is at a 5-month high.

• Sales volume is higher in 4 of the last 5 months
• New home supply is at a 5-month low
• Buyer foot traffic is on the rise

For home buyers , September’s New Home Sales data may foreshadow a shift in builder sales strategies and it’s something worth watching.

Recall that in April, the month that the federal homebuyer tax credit contract deadline passed for non-military citizens, sales of new homes was strong as buyers rushed to meet the April 30 cut-off date.

When the month ended, there were 216,000 new homes for sale — an inventory that would have taken 6 months to sell off in full, given April’s sales pace.

In May, however, the month after the tax credit deadline, buyers vanished. As a consequence, total units sold dropped 31 percent to their lowest level in recorded history. Coincidentally, at the end of May, there were still 216,000 units for sale.

By contrast, though, at May’s sale pace, the inventory would have needed nine months to sell out.

This is why builders are optimistic. The market for new construction is improving so buyers may have a harder time trying to negotiate for items like free upgrades or sales price reductions. So long as New Home Sales improve, home buyers may find themselves paying more money for less house.

Therefore, if you’re in the market for a newly-built home , you may want to move up your time frame. The longer you wait, the more it may cost you.

Consistent with the most recent Case-Shiller Index, the government’s Home Price Index said home prices rose between July and August. 

The Federal Home Finance Agency’s data showed values up 0.4 percent nationwide, on average. Region-by-region, however, the results were scattered. Coastal states tended to perform poorly. Plains states tended to perform well.

A brief look at the regional disparity:

• West South Central : +1.5%
• East North Central : +1.2%
• Pacific : -0.2%
• South Atlantic : -0.2%

Breakdowns like this are important because they highlight the fundamental problem with national real estate data and that’s that home buyers don’t buy real estate in a national market, or even a regional one.

Buyers buy local.

When we look at national figures like the Home Price Index, it’s important to remember that real estate is a collection of tiny markets which, when lumped together, form small markets which, in turn, lump together into larger markets and so forth.

To illustrate this point, a deeper look at August’s Home Price Index data shows that, within the aforementioned Pacific Region, in which home values fell 0.2%, the state of California posted a 2.9% increase. You can be sure that within the state of California, there are cities that performed better than the 2.9 percent, and within those cities, there are neighborhoods that did the same.

Real estate is most definitely local.

That said, we can’t discount the national report entirely. Broader housing statistics like the Home Price Index reflect on the economy and are often used to help shape policy in the nation’s capital. When you need to know what’s happening in your hometown, though, your best source of data is a knowledgeable real estate professional.

Existing home sales jumped 10 percent in September, the biggest monthly jump on record and a signal that the housing market may be returning to a normal sales pattern post-$8,000 federal tax credit.

Existing Home Sales counts home resales (i.e. not new construction) and 80 percent of home resales close within 45-60 days. It’s no surprise, therefore, September’s data is strong.

Throughout the July and August, mortgage rates were in free-fall, pushing home affordability to near-record levels. Concurrently, the number of homes available for sale climbed to multi-year highs.

“Deals” were in ample supply this summer and eager home buyers snatched them up.

Some of these deals included “distressed properties”, a categorization that includes homes in various stages of foreclosure or short sale, accounted for 35 percent of all sales, an uptick of 1 percent from August.

According to the National Association of Realtors®, home resales split as follows:

• First-time buyers : 32 percent of all buyers
• Repeat home buyers : 50 percent of all buyers
• Investors : 18 percent of all buyers

By contrast, in November 2009, first-timers accounted for more than half of all resales.

For home buyers, September’s Existing Home Sales report foreshadows a more competitive housing market through the New Year. In addition to rising sales volume, home supplies are down by nearly 2 months from July.

At the current pace of sales, the complete housing stock would be depleted in 10.7 months.

Mortgage markets improved last week overall, but barely. After making a sizable move lower through Monday, Tuesday and Wednesday, mortgage pricing jumped Thursday and Friday. Nearly all of the early-week gains were erased.

Conforming mortgage rates ended the week slightly improved.

There wasn’t much economic news on which for markets to trade last week. In its absence, bond traders took cues from the currency markets, among other things.

Mortgage rates are closely tied to the value of the U.S. dollar. This is because mortgage bond investors are repaid in U.S. dollars and, as the dollar gains value, demand for dollar-denominated bonds tend to grow.

More demand for bonds raises prices which, in turn, lowers rates.

Bond prices and bond yields move in opposite directions.

The dollar was strong in the first part of last week, then weakened through Friday’s close with the G-20 meeting looming.  Mortgage rates trended along similar lines.

This week, there’s a return to data and mortgage markets should respond — especially because the week is housing-data heavy. Housing is believed to be a key part of the country’s ongoing economic recovery.

• Monday : Existing Home Sales
• Tuesday : Case-Shiller Index, Consumer Confidence, Home Price Index
• Wednesday : New Home Sales
• Thursday : Initial and Continuing Jobless Claims

Mortgage rates are near all-time lows and it’s unclear whether they’ll stay this low, or start rising. Either way, if you haven’t talked to your loan officer about a refinance at today’s great pricing, set aside some time this week to do that.

Once rates reverse higher, they’re unlikely to fall back down.

30-year fixed mortgage rates rose last week, marking the first time in a month that rates failed to fall week-to-week.

The data sources from Freddie Mac, one of the government’s major mortgage securitizers and a sister entity to Fannie Mae. Each week, Freddie Mac collects mortgage rate data from more than 120 lenders nationwide and publishes the results in a report called the Primary Mortgage Market Survey.

According to this week’s PMMS, the 30-year fixed rate rose 0.02% and now averages 4.21% nationally. The average accompanying cost is 0.8 points.

1 point is equal to 1 percent of the loan size.

Note, though, that these are just averages. Just as real estate markets are local, mortgage rates can be, too. As an illustration, look how this week’s rates break down by region:

• Northeast : 4.22 with 0.8 points
• Southeast : 4.30 with 0.8 points
• N. Central : 4.19 with 0.8 points
• Southeast : 4.23 with 0.7 points
• West : 4.17 with 1.0 points

The rate-and-fee combination you’d get in your home state , in other words, is different from the rate-and-fee combination you’d get if you lived somewhere else. In the West, rates are low and fees are high; in the Southeast, it’s the opposite.

The good news is that, as a rate shopper, you can have it whichever way you prefer. If getting the absolute lowest mortgage rate is worth the extra cost to you, have your loan officer structure to structure your loan as such. Or, if you prefer higher rates and lower costs, you can go that route, too.

Banks offer multiple mortgage set-ups to meet every type of budget and, with rates down 1.00% since April 8, there’s good cause to call your loan officer about a mortgage refinance. See what set-up will work best for you.

The company behind the popular FICO scoring model has published a “What If?” series for common, specific credit missteps.

If you’ve ever wondered how your credit score would be affected by a missed payment or a maxed-out credit card, now you can use a look-up guide to assess the probable damage.

As published by myFICO.com, here’s a few common financial difficulties and how they affect FICO scores.

Max-Out A Credit Card

• Starting score of 780 : 25-45 point drop
• Starting score of 680 : 10-30 point drop

30-Day Delinquency

• Starting score of 780 : 90-110 point drop
• Starting score of 680 : 60-80 point drop

Foreclosure

• Starting score of 780 : 140-160 point drop
• Starting score of 680 : 85-105 point drop

Not surprisingly, the higher your starting score, the more each given difficulty can drop your FICO.  This is because credit scores are meant to predict the likelihood of a loan default. People with lower FICOs are already reflecting the effects of risky credit behavior.

Also worth noting that the above is just a guide — your scores may fall by more — or less — depending on your individuak credit profile.  The number and type of credit accounts you hold, plus their respective payments and balances make up your complete credit history.

Read the complete report at myFICO.com.

According to the Commerce Department, the number of single-family Housing Starts increased to 452,000 units in September, a 19,000 improvement over August.

A “housing start” is a new home on which construction has started.

Housing Starts data is surveyed and broken-down by housing type:

1. Single-Family Housing Starts
2. Multi-Unit Housing Starts (2-4 Units)
3. Apartment Building Housing Starts (5 or more units)

The government logs each type separately, but also lumps them into a single, comprehensive figure within its reports. For this reason, headlines surrounding the story seem contradictory.

For example:

• Marketwatch : Housing starts rise for 3rd straight month, up 0.3%
• CNN : Housing starts jump to 5-month high

It’s single-family homes that most Americans purchase, though, and that’s why single-family starts are the numbers worth watching. As 75% of the market, it’s more relevant than the joint numbers most commonly reported by the press.

In September, single-family starts did move to a 5-month high but buyers and sellers should keep the figures in perspective. Just because starts are rising doesn’t mean the housing sector has turned around for good.

The first reason why is because, in September, starts were 75 percent less as compared to 5 years ago at the peak of housing. And if you feel that’s an unfair comparison, even as compared to the last 12 months, September’s data was tens of thousands below average.

Second, September’s Margin of Error happened to exceed its actual measurement. This means that the 4 percent in starts may actually turn out to be a loss of 4 percent (or more!) once the data is collected in full.

If there’s a reason to think the New Homes market is coming back, though, it’s that home builder confidence is also at a 5-month high. Foot traffic is rising and builders are optimistic about the next six months.  This could mean higher sales prices and less chance for negotiation.

Buyers in search of new homes may find it tougher to make a deal the closer we get to 2011.

As the “pulse of the single-family housing market”, the Housing Market Index is a monthly product of the National Association of Homebuilders. Its scores range from 1-100, with a reading a 50 or better suggesting “favorable conditions” for builders.

Because of its methodology, the Housing Market Index can offer excellent insight into the market for newly-built homes. This is because its value is a composite of three survey questions:

1. How are market conditions today?
2. How do market conditions look 6 months from now?
3. How is the prospective traffic of new buyers for new homes?

Builder responses are collected, weighted, then presented as the Housing Market Index.

According to the NAHB, October’s HMI reading of 16 is its highest value in 5 months. The uptick hints that the market for newly-built homes may rebound more quickly that this summer’s weak new homes sales figures would otherwise suggest.

You’ll remember that, between April and August, the number of new homes sold per month fell by 30 percent and the available, new home inventory climbed 2.3 months.

This month, though, builders report much better foot traffic and, as a result, have raised their expectations for the next six months of sales. Low mortgage rates are likely aiding the optimism, too.

As compared to 1 year ago, average, 30-year fixed mortgage rates are lower by 0.75 percent, a payment savings of $45 per $100,000 borrowed.