Rate Update December 14, 2010

Mortgage rates are mostly unchanged this morning.

This morning’s economic data came in mostly hotter than expected which may put pressure on rates to move higher.  The Commerce Department reported earlier that retail sales were higher in November than analysts had expected.  Furthermore, they revised October’s previously reported figure up by .50%.

In a separate report the Labor Department reported that headline prices at the wholesale level of our economy grew at a faster than expected clip in November.  However, when you strip out volatile food and energy prices the Producer Price Index was reported in line with expectations.  Tomorrow the Consumer Price Index will be reported.  Since inflation is the primary driver of mortgage rates we need to pay close attention to these figures.

The National Federation of Independent Business reported that their monthly index measuring the optimism small business owners rose to the highest level in 3 years, but still remains in a historically weak range.

All this good news for the economy is typically bad for mortgage rates but technical trading patterns appear to be keeping rates stabilized at these levels.  The Fed will make their monetary policy statement later on today.

Current outlook: near-term floating, longer-term locking