An “underwater mortgage” is when a homeowner owes more on their current mortgage(s) than what the home is currently worth and obviously is a big concern for the housing market.

According to Zillow.com, the rate of underwater mortgages fell last quarter.  The percentage of single-family homes with negative equity fell to 21.5 percent in the second quarter. Many see this as an indicator that default and foreclosure rates could slow from current levels and is reflective of some stability in home values and stronger demand for housing with all-time low mortgage rates still driving up demand.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +50 basis points last week which caused 30 year fixed rates to decrease for both government and conventional loans. The gains in mortgage backed securities (the only thing 30 year conventional mortgage rates are based on) were the result of a weaker than expected Unemployment report. The Unemployment Rate remained unchanged at 9.5% but market participants were very disappointed with the growth levels of the Non-Farm Payrolls in the private sector.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises:

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.