Mortgage Rates Start Week Sideways. Busy Week Ahead

Mortgage rates last week benefited from nervous investor sentiments regarding the fate of Greece and Goldman Sachs. A lack of conviction to own risky stocks heading into the weekend led to a flight to safety rally in benchmark Treasuries which helped mortgage-backed securities and allowed lenders to offer slightly lower mortgage rates.

After bouncing back and forth in a tight range for the entire week, mortgage rates went into the weekend close to their best levels of the month (which really wasn't too different from what we have been seeing over the past 10 days.)

Over the weekend, the European Union and Greece announced that an aid package was put together to prevent Greece from defaulting on their national debt. This bailout was expected to “safeguard financial stability in the euro area as a whole”. This news ended up forcing traders to sell a portion of their "flight to safety" positions in Treasuries which pushed MBS prices lower at the open. Almost all of Friday's modest gains have been erased.

We have several economic releases to start the week. First report to hit the news wires comes from the Department of Commerce with the release of Personal Income and Outlays. A stronger consumer benefits the stock market while a weaker consumer benefits the bond market. This report gives us three readings on the health of consumers. The first is personal income which shows the monthly change in income that households receive from all sources. Next is consumer spending, which shows the monthly change in the amount of money consumers are spending on durable and non-durable goods and services. The final reading is the Personal Consumption Expenditure, a preferred read on inflation.