Mortgage Rate Update February 22, 2016

Posted on by Evan in Rate Update, Swanson Home Loans Blog - Mortgage Rate Updates and More

Mortgage rates are unchanged from the latter half of last week.

Friday’s Consumer Price Index (CPI) report from the Bureau of Labor Statistics suggests that the Fed may have to get back on the path of hiking rates.  The report showed that the Core CPI, prices for consumer goods excluding food and energy, rose by 2.2% on a year-over-year basis.  This is the “hottest” figure since June 2012 and above the Fed’s target of 2.00%.  Inflation is the primary driver of long-term interest rates including for home loans.

Is inflation ahead? If so, it would pressure mortgage rates higher.
Is inflation ahead? If so, it would pressure mortgage rates higher.

This Friday we’ll get the Personal Consumption Expenditure price index which is the Fed’s favorite gauge for inflation.  If that also comes in higher than expected then it would likely pressure mortgage rates up.

Looking at the rest of the economic calendar this week the Case Shiller Home Price index is due out tomorrow.  We’ll also get readings on consumer confidence and existing home sales.  On Wednesday the FHFA will release their home price figures and on Friday we’ll get the 2nd estimate for 4th quarter 2015 GDP.  I wouldn’t be surprised to see some volatility this week given the depth of data scheduled for release.

From a technical perspective mortgage rates are trading within a ~.125% range.  I don’t necessarily see a catalyst for rates to improve in the near-term but I also don’t see them increasing so I will shift to a neutral position.

Current Outlook: neutral