Mortgage markets improved slightly last week overall, but closed out the week much worse from the best levels of the week.

On Wednesday, briefly, mortgage rates touched an 8-week low.  Following that, mortgage rates began to climb and stayed on an upward trajectory clear through Friday’s closing.

Rate shoppers suffered, realizing a 0.250 percent rise in rates – roughly $32 per month per $200,000 borrowed.

The biggest story of last week was the U.S. jobs report.  It showed the Unemployment Rate climbing to 9.7 percent and a loss of 216,000 jobs nationwide.

Neither figure was a surprise, per se, but Wall Street had visions of a stronger showing.  Investors want to see strength in housing and employment and, for now, they’re only getting the former.  And so long as the U.S. economic future is unclear, mortgage rates will remain unpredictable.

This week, there isn’t much news, but there are some stories to keep an eye on:

• The Fed’s regional economic summary releases Wednesday. Strength should drive rates up. Weakness should lower them.
• Gas prices are easing, a positive for the economy (and negative for rates) as the Holiday Shopping Season nears
• Two consumer confidence polls are released this week.  Confidence can lead to spending, a spur for the economy.

When there’s a lack of economic data, mortgage rates tend to trade on trends. If you’re shopping for a mortgage, watch for developing patterns and be ready to lock at a moment’s notice if mortgage rates are rising — rates tend to worsen with more speed than at they improve.

Volume figures to be light on Wall Street today as traders get a head start on Labor Day weekend.  It could make shopping for a mortgage a bona fide challenge.

Expect rate volatility this morning and afternoon and, therefore, by extension, expect wild swings in the Home Affordability Index.

As mortgage rates rise and fall, monthly mortgage payments do, too.

The relationship between “vacation days” and mortgage rate volatility stems from 2 facts — (1) Conforming mortgage rates are based on the price of mortgage-backed bonds, and (2) mortgage-backed bonds trade just like stocks.  You can’t make a deal without matching a buyer and a seller at a specific price.

With so many traders on vacation today, therefore, there are fewer opportunities to match buyers and sellers.  As a result, expect mortgage bond prices to rise and fall with more velocity than on a “normal” day — especially because the August jobs report was just released.

So far this morning, mortgage rates have been jumpy and are higher versus Thursday’s close.

That said, mortgage pricing is fluid, changing every minute of every day.  Today, expect those changes to be exaggerated.  If you have a chance to lock a favorable rate, consider taking it because, before long, the rate could be gone.

Mortgage markets were flat last week overall, although mortgage rates were somewhat volatile from day-to-day.

For rate shoppers, the best pricing was available Monday morning and Friday afternoon — everything in between was slightly elevated.

It’s the second consecutive week in which rates finished unchanged.

There was a string of good news last week about the economy, led by housing.  New Home Sales, Existing Home Sales, and the Case-Shiller Index all surprised to the high-side and consumer confidence numbers came in higher-than-expected, too.

In prior weeks, strong data like this would have caused mortgage rates to rise.  Last week, however, it didn’t.  Mostly because foreign demand for mortgage-backed bonds has remained strong.

This week, there’s only one major data release and its timing may prove to be problematic.

Friday, the Bureau of Labor Statistics releases the August Non-Farm Payrolls report.  With housing’s rebound seemingly underway, the jobs report takes on added significance.  Joblessness can undermine consumer confidence and spending and cause harm to the recovering U.S. economy.

This is one reason why rate shoppers should be cautious toward the end of the week — the jobs report will move markets.  The other reason to be cautious is because Friday is the day before Labor Day and Wall Street will be short-staffed.

Fewer traders means more volatility — if rates start to pop, they’ll really pop.

Where does the money go?If you’re like most U.S. consumers, more than half of it goes to housing and transportation costs.

According to the government’s most recent Consumer Expenditure Survey, spending patterns are little changed from years prior.

More money is spent on entertainment and less money is spent on dining out.  Beyond that, the figures are somewhat static.

Meanwhile, using on the survey’s industry-by-industry breakdown, we can see how monthly housing payments and daily commuting costs impact a household’s budget.

For the budget-conscious, going out less often and bargain-shopping can help pad the bottom line, but not as much as living in a less expensive home or moving closer to work.

Even a refinance into lower rates can make a difference.

Mortgage markets improved last week despite a series of volatile trading sessions.A combination of weaker-than-expected economic data and massive-sized Treasury auctions kept investors guessing and mortgage rates moving.

• Weak data nudged rates lower
• Treasury auctions pushed rates up

By Friday, however, momentum was in favor of lower rates and that’s how the week finished up — slightly more favorable overall.

It’s the second consecutive week in which rates fell.

This week, markets will digest a host of new data.  Rate shoppers can expect the volatility to continue.

Monday afternoon, Auto and Truck Sales data is released.  We normally don’t track this report, but because of the auto industry’s role in the economy right now, strong numbers should lead to a mortgage bond sell-off, pushing mortgage rates higher.

Then, Tuesday, the Personal Income and Personal Spending report is released as well as the Pending Home Sales Index.  Again, strength in the numbers should result in higher mortgage rates.

Thursday, Initial Jobless Claims will get the market’s attention.  The data has been trending lower over the past two months and, last week, the rolling, 4-week average posted its lowest mark since January.  A reversal in the trend would likely boost the mortgage markets, helping rates to fall.

And, Friday, the jobs report is due.

With unemployment close to 10 percent nationwide and more than 3 million jobs lost this year, investors will respond to “less weak” data with enthusiasm — a bad result for rate shoppers.  No matter what the data says, it’s sure to move markets.

Mortgage markets rallied Tuesday while Fed Chairman Ben Bernanke gave his semi-annual testimony to Congress.By the time the day was over, some conforming mortgage rates were down by as much as 0.250 percent.

One of the leading causes for the market rally was Chairman Bernanke revealing an “exit strategy” from its massive market stimulus.

Until Tuesday, the Fed hadn’t gone into much depth about means and methods by which it would unwind its interventions.  In addition to penning a widely-read Op-Ed piece in the Wall Street Journal Tuesday, Bernanke testified to Congress that the Federal Reserve has a viable “exit strategy”.

Wall Street was pleased to hear it.

The specter of long-term inflation has spooked the mortgage markets off-and-on since the start of the year.  It’s one of the reasons why mortgage rates have been so jumpy, and why they crossed 6 percent last month.  Inflation is terrible for mortgage markets.

So, with the fear of inflation subsiding — at least temporarily — mortgage rates sunk Tuesday.

With any bit of luck, momentum will carry rates lower today and through the rest of the week.  But, don’t get greedy.  Mortgage markets are notoriously fickle and one “bad” statement from the Fed Chairman could cause rates to rise right back up.

Bernanke’s complete Tuesday testimony can read online at the Federal Reserve website.

Mortgage markets had an awful week last week as a combination of strong economic data and stand-out earnings results led investors into more risky investments.The Dow Jones Industrial Average was up 7 percent.

Mortgage rates, unfortunately, didn’t fare as well.  As the first week since June in which mortgage rates rose, rates were up by a lot.

Mostly for three reasons.

The week’s first big mortgage rate bump came Tuesday, right after Goldman Sachs released its blowout quarterly numbers. As one of the world’s largest financial firms, Goldman’s strong showing hinted that the financial crisis may finally be finished.

Next, rates were impacted by the release of the Fed Minutes from its June meeting.  In the report, it was revealed that Ben Bernanke & Co raised the economic forecast for both 2009 and 2010, noting that the recession should be ending soon.

Lastly, June data showed that Retail Sales is expanding and that jobless claims are falling — two potential positives for the U.S. economy that relies so heavily on consumer spending.

This week, without much data, the mortgage market should continue to take its cue from the stock market.  If stocks improve, rates are expected to worsen.  And vice versa.

The week’s key events are Fed Chairman Bernanke’s Tuesday testimony on Capitol Hill and Thursday’s Existing Home Sales data.  Mortgage rates remain volatile so if you’re offered a rate that comfortably fits your household budget, consider locking in before the market can change.

The government’s First-Time Home Buyer Tax Credit expires December 1, 2009.

If you expect to use the program in conjunction with a home purchase, therefore, you may want to consider yourself officially “on the clock”.

Assuming a 60-day window between contract and closing, there are now 77 days left to find a home and go under contract for it.

The First-Time Home Buyer Tax Credit refunds up to $8,000 at Tax Time for qualified home buyers.  A few of the program’s qualification criteria include:

• Home buyer must not have owned a primary residence in the past 36 months
• The home may not be purchased from a family member
• The household adjusted gross income must be below $95,000 for single tax filers and $170,000 for joint tax filers

The tax credit itself is limited to $8,000 or 10% of the purchase price, whichever is less.

Remember, though: The refund is a true tax credit — not a deduction.  This means that a taxpayer owing $8,000 to the IRS and claiming the $8,000 First-Time Home Buyer Tax Credit would owe the IRS nothing on April 15, 2010.

The complete list of qualifying criteria is posted on the IRS website.

For the fourth consecutive month, the country’s foreclosure activity was dominated by a small number of states.

As reported by RealtyTrac.com, more than 50 percent of the country’s foreclosure-related actions in June concentrated in just 3 states:

1. California
2. Florida
3. Nevada

The states rounding out the Top 10 include Arizona, Georgia, Michigan, Texas, Ohio, Illinois and Colorado.

Meanwhile, June’s reported foreclosure figures are consistent with the data from earlier this year, suggesting that the foreclosure remedy plans put forth by the government and by lenders can barely keep pace with the national default rate.

Foreclosure-related actions nationwide are up 5 percent from May.

The silver lining in data this negative is that foreclosures are creating tremendous buying opportunities for the right buyers.  Because foreclosed homes tend to sell at a discount versus non-foreclosed homes and because mortgage rates are low, home sales are showing strength in a multitude of markets because of ample supply at relatively cheap prices.

Distressed homes accounted for one-third of all existing home sales in May.

Search the complete June 2009 foreclosure report for yourself, including foreclosure heat maps and other trends on the RealtyTrac website.

Mortgage markets worsened for the third straight Tuesday after the government reported June’s Retail Sales report came in slightly better than expected.Since falling to near 5.000 percent last week, 30-year fixed conforming mortgage rates have risen by almost 3/8.

It’s a similar mortgage rate pattern to what we’ve seen over the last 10 months — rates drift down to near their “all-time lows”, and then surge higher over just a few days time.

This week’s movement, in particular, is vexing home buyers and would-be refinancers.

Many people thought mortgage rates would break below the 5.000 percent threshold.  The markets, however, had other ideas.

In addition to the unexpectedly strong Retail Sales data, last month’s Producer Price Index reported higher than expectations, too.

A rising PPI is important to rate shoppers because the figure is akin to the Cost of Living measurement for household, but for American businesses instead.  The thought goes that if business costs are rising, consumer costs will eventually rise, too, as businesses share their expenses with American households.

This is inflationary, of course, and inflation is awful for mortgage rates.  It’s part of the reason why mortgage rates closed higher again Tuesday.

All year long, mortgage rates have been jumpy and unpredictable.  This past week has been no different and it’s why you shouldn’t necessarily try to time for a market bottom with mortgage rates.

If an interest rate looks good to you today and the payment is manageable, consider locking it in.  There’s no guarantee rates will ever fall back toward 5.