An improving US economic outlook was negative for mortgage rates this week. Reduced concerns about Europe also caused a partial reversal in the flight to safety trade. As a result, mortgage rates ended the week higher.

Early in the month, the December Employment report showed a larger than expected increase of 200K jobs, and the Unemployment Rate continued to move lower. This week, Weekly Jobless Claims fell to the lowest level since April 2008. The labor market is one of the most important factors in the health of the economy, and many investors now view the outlook as brighter than it has been since the financial crisis began. If this is the case, it will be great news for the economy, and job gains will increase the willingness and the ability of people to purchase homes.

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Hidden Mortgage Tax-

Americans had better enjoy the extra $40 they’ll continue to get in their bi-weekly pay checks for the next two months, because most of them will be paying for it many times over in the form of higher mortgage costs. Lost in the contentious debate over the payroll tax cut extension, a 2% cut in U.S. workers’ Social Security tax, was the devious way devised to pay for it. The law that Congress passed and President Obama signed, included a provision that will increase a guarantee fee that finance companies Fannie Mae and Freddie Mac charge to mortgage loan originators, a fee that will get passed onto borrowers as slightly higher interest rate. Continue reading "Hidden Mortgage Tax*"