Last week proved to be another great week for the mortgage bond markets.

30 year conventional bonds increased 69 basis points, 30 year FHA bonds increased 100 basis points and 15 year conventional bonds increased 84 basis points.  Overall these bond price increases led to a decrease in mortgage rates of approximately 8 basis points on average.  Analysts believe investors flocked to bonds last week due to growing concerns with the United States economy.  Two key manufacturing indexes came in weaker than expected and the consumer sentiment index plunged (indicating that consumers are not nearly as comfortable with the state of the economy as Wall Street and Washington would like them to be).

Mortgage markets this week will be affected by the June housing reports that are due out.  June housing starts and permits are due out Tuesday while existing home sales are due out Thursday.  Both numbers are expected to be down from May.  Federal Reserve Chairman Ben Bernanke will speak Wednesday and Thursday.

Overall, the equity markets are expected to struggle this week, adding support to low mortgage rates.

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