Mortgage Rate Update March 1, 2011

Although the note rates available today are unchanged from yesterday the closing costs required to lock these rates have worsened.

Renewed concerns over inflation are putting pressure on mortgage rates this morning.  As we’ve covered here on ‘rate update’ (see HERE) prices in developing economies are growing rapidly many analysts believe those price pressures will eek there way into the US economy.

Yesterday the EU reported the fastest pace of inflation since October 2008.  Today, in prepared testimony on Capitol Hill Fed Chairman Ben Bernanke is telling lawmakers that the Fed is ready to tackle inflation should it begin to show domestically.  Inflation is the primary driver of mortgage rates so any focus on inflation will typically push rates higher.

The Institute for Supply Management released it’s monthly reading on manufacturing activity and it showed stronger than expected expansion.  Embedded in this report was an encouraging reading on new hiring which could foreshadow Friday’s all-important jobs report. Good news for the economy is often bad news for mortgage rates.

Going back 3 weeks mortgage rates have steadily improved for 10 of the past 14 days.  From a technical perspective I remain concerned that we’re fighting an uphill battle.  I will remain in a locking position.

Current outlook: locking