Mortgage Rate Update December 22, 2010

Overall, mortgage rates are mostly unchanged today.

Despite weaker than expected economic & inflation data, which tend to be interest rate friendly, mortgage-backed bonds are trading lower this morning.

The government reported today that the US economy grew by a 2.6% growth rate during the 3rd quarter.  This was slightly higher than the previously released figure but less than expectations of 2.8%.
Meanwhile, the National Association of Realtors reported that existing home sales increased by less than expected in November.  Analysts had been expecting a 6.5% growth rate and they only grew at a 5.6% clip.

Lastly, this morning’s core Personal Consumption Expenditure Price Index, the Fed’s preferred gauge of inflation, showed that prices increased by an annual rate of only .5% during the 3rd quarter.  This is the lowest level on record but because the measurement does not account for food and energy prices the markets are not paying a ton of attention.

Current outlook: neutral