Rate Update July 7, 2008
Mortgage rates appear to be trending higher as economic uncertainty prevails over the financial markets. Friday’s jobs report indicated that the labor market remains very weak. June marked the 6th consecutive month that the US economy lost jobs.
However, higher commodity prices continue to raise concerns over inflationary pressures in our economy.
The Fed is in a difficult position because they are responsible for maintaining price stability (low inflation) & sustainable economic growth. Over the next two days three Fed officials are scheduled to speak, including Ben Bernanke tomorrow. The financial markets will be listening to their outlooks as to when the Fed may act to lower or raise short-term rates in the future. We believe mortgage rates would benefit from an indication that they will likely move to raise short-term rates because of the implications it would have on the US Dollar.
For now, we are going to recommend that our clients lock.