Mortgage rates are priced worse again this morning.
It’s a different day but same story as yesterday. The bottom line is that the economic recovery here in the US continues chug along and for now worries over financial contagion in Europe have subsided.
With these two trends in place there is less demand for the flight-to-quality trade that helped mortgage rates remain near all-time low levels for the previous 4 months.
Weekly jobless claims fell by more than expected last week providing another signal that the jobs picture is improving. In a separate report, the Labor Department reported that prices at the wholesale level of the economy grew by 3.3% on a year-over-year basis last month. When you strip out volatile food & energy prices inflation grew at a 3.00% clip. Traditionally, inflation is the primary driver of mortgage rates and these figures are a little on the hot side. That said, just because producers and wholesalers are paying more doesn’t mean they’ll be able to pass those increases onto consumers. We’ll learn more about that tomorrow when the Labor Department releases the latest Consumer Price Index figures.
I wouldn’t be surprised to see rates stabilize for a day or two given that they’re up .125%-.25% over the last 48 hours.
Current Outlook: neutral