Rate Update for August 14, 2008

Rates are effectively unchanged this morning despite worse than expected inflation data. 

The Labor Department reported earlier this morning that the Consumer Price Index (CPI) rose by .8% in July alone.  On a year-over-year basis CPI rose by 5.6% which is the biggest rise in consumer prices since 1991.  Core CPI, which strips out volatile food and energy prices, rose by .3% in July and 2.50% year-over-year. 

As we know inflation is the enemy of mortgage rates.  Today’s report is not likely to help mortgage rates move lower anytime soon.  However, the markets were bracing for a poor report so the bond market is not reacting too terribly bad yet.

From a technical standpoint a negative trend line has developed since mid-July.  If you look at the chart below you’ll see a blue line which is acting as a ceiling of resistance.  This resistance level will make it hard for rates to move lower. 

 Current Outlook: locking

Rate Update for August 13, 2008

Rates are slightly lower this morning as volatility in the financial markets continues.  In the past four days of ‘rate update’ we’ve reported changes (up or down) in interest rates which is a rare occurrence.

Much of the credit for lower mortgage rates can be credited towards a weak stock market.  Yesterday the markets dropped approximately 1% on renewed credit fears and today the Dow Jones Industrial Average is off by over 150 points thanks to a weak retail sales report.  For an explanation on how a weak stock market can help lower mortgage rates read this link.

Tomorrow brings the Consumer Price Index (CPI) report.  Should Core CPI come in less than it did last month it would be a good sign for mortgage rates.  However, should Core CPI edge higher we would likely see higher mortgage rates by the end of the day.  We’ll report back tomorrow with results.

Current Outlook: neutral ahead of CPI