Mortgage Commentary
We saw rates shed a few basis points last week. We don't expect that to continue, especially with oil prices rising along with inflation concerns. Inflation concerns - what with oil trading at $120 a barrel - appear to be behind the pressure.
Try as they might, mortgage bonds are having a hard time offering us lower rates. With the economic news mostly stable and price pressure fresh in everyone's mind, there's little reason to expect any sort of strong downturn for mortgage rates anytime soon. In fact, some slight upward pressure is in place at the moment, and a slew of new data is out this week covering Retail Sales, inflation, Industrial Production and Housing.
Monday's bond market has opened up slightly despite early stock gains. The stock markets are kicking the week off in positive territory with the Dow up 75 points and the Nasdaq up 19 points. The bond market is currently up 6/32, but we will likely see a slight increase in rates as a result of weakness late Friday.
Wednesday's only relevant report is April's Consumer Price Index (CPI). It is similar to next week's PPI report, but measures inflationary pressures at the more important consumer level of the economy. Its results will be watched closely and can lead to significant volatility in the bond market and mortgage pricing. We could see inflation concerns take an even stronger role in mortgage rates, and that could push them higher.
Overall, it likely will be a moderately active week for mortgage rates. Besides the week's important economic news, look for the stock markets to be a major influence on trading. I suspect we will see a fair amount of volatility in stocks, which should affect bond prices. Significant stock weakness should translate into bond gains and lower mortgage rates. However, if the major stock indexes rally, we could see mortgage rates move higher as a result.
If you're looking to refinance into a fixed rate loan, you might want to act soon. This week will have a few pieces of economic data that could push rates higher.
Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on qualification criteria from program to program. If you like the rate today, the safe bet is to lock. Even if rates improve, they wouldn't improve enough in the short term to make you cry about it. But if you are an ardent market bear, and accept the risk of negative mortgage headlines, and believe the economy will just get more bad news next week, and you have the money to risk, you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking and then watching rates get a little better.
Search today's mortgage rates anonymously. And, as always, you can call me at (508) 471-4144 with any questions about mortgage rates and to discuss your best loan options.
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