Mortgage Rate Update February 8, 2011

Mortgage rates are mostly unchanged this morning.

For the seventh straight day mortgage-backed bonds are in the red threatening to push rates higher.  Inflation, inflation, inflation is the theme of the month.

Earlier today China’s central bank raised short-term interest rates to help ease inflationary pressure.  In the emerging economies inflationary pressure has been running at a hotter clip than we’re seeing in the US.  Investors are concerned that inflationary pressure will leak into our economy via import prices and raw material costs.  However, let’s not forget that year-over-year inflation rates here in the US are currently at or near all-time lows.

In a speech earlier today Fed Official Jeffrey Lacker voiced optimism about the US economic recovery and stated that the Fed should reconsider QE2 (read about QE2 HERE).

Later today the US Treasury will auction $32 billion in 3-year notes.  With yields moving higher over the past few days you’d expect demand to be strong but we’ll have to wait and see.

Current outlook: locking