Mortgage Rate Update January 18, 2012

Mortgage rates are unchanged again today.

During times when major events like the European Debt Crisis are not in focus for the interest rate markets inflation is the primary driver (CLICK HERE to understand why).  This morning the Labor Department reported that wholesale prices rose by the sharpest annual clip since the middle of 2009.  Ordinarily this might scare interest rates higher but with all focus on Europe rates are not moving higher this AM.

Speaking of the European Debt Crisis Greece’s government is in talks with private creditors to negotiate a settlement which would pay approximately 32% of the face value of the debt.  If you’ll remember back to the early stages of Greece’s woes the “haircut” that creditors would accept has gradually increased from 40% to 68% today.  The EU inability to take coordinated decisive action at the outset of the crisis is becoming apparent now.

Meanwhile, the International Monetary Fund (IMF) announced that they are seeking an additional $500 billion from China, Japan, and oil exporting countries to help bolster their “bailout firepower”.

Domestic economic fundamentals continue to suggest that locking is the safest play but these reports are being overshadowed by anxiety over Europe.  I will maintain my locking bias.

Current Outlook: locking bias