At the time I am writing this mortgage interest rates are at the same level they were at last Friday.
This week was dominated by news about the Fiscal Cliff and the Europe debt crisis. Politicians still can't come to an agreement about how to avoid the approaching Fiscal Cliff when the all of the Bush tax cuts are set to expire. As long as there is uncertainty the market will remain volatile. My guess is still that they will wait to the last minute then come to a short term agreement, basically extending the problem until the new Congress starts.

Today the US employment report came out. The report was mainly good with strong job creation numbers and the unemployment rate dropping. However many economist are discounting the report saying the numbers were affected by Hurricane Sandy and temporary holiday jobs.

In Europe, most of the region is already officially in a recession, and the economically strongest country Germany looks like they are about to slip into a recession as well. Yesterday the European Central Bank left their version of our Fed Funds rate unchanged at 0.75%.

Next week on Tuesday the Federal Reserve(FED) is meeting and is expected to announce some details about quantitative easing on Wednesday. The Fed has been using quantitative easing to keep mortgage rates low by selling short term debt and buying long term debt such as mortgage backed securities. This keeps mortgage rates low because then there is more money competing for mortgage backed securities thus driving rates down. The Fed is almost out of short term debt to sell, but most economists believe the Fed will still continue buying long term debt by printing more money.