Mortgage Rate Update May 31, 2016

Mortgage rates are unchanged from last week.

Let’s start off with some housing news.  The S&P Case Shiller Home Price index report was released earlier today and for the 6th straight month Portland led the nation in year-over-year appreciation coming in at 12.3%.  Tight inventory continues to push prices higher.

In a separate report released by the Commerce Department inflationary pressure, as measured by the Personal Consumption Expenditure (PCE) index, remains fairly tepid.  The PCE price index, which is the Fed’s favorite gauge of inflation, increased 1.1% year-over-year.  This marks the 48th straight month that annual inflation has been below the Fed’s target of 2%.  One would think that the Fed would be less likely to hike rates given that price pressure is so low.

Looking ahead for the remainder of this holiday shortened week the economic calendar is full and concludes with the all-important jobs report this Friday.  From a technical perspective conditions in the interest rate market look favorable.  I am going to recommend floating for now.

Current Outlook: floating