Mortgage Rate Update February 16, 2011

Mortgage rates are unchanged again this morning.

Inflationary pressure at the wholesale & manufacturing level of our economy hit a 2-year high according to this morning’s Producer Price Index.  As we blogged about yesterday price pressure around the globe is rising and the question is how severely it will hit consumers here in the US.  Inflation is the primary driver of mortgage rates so this morning’s report may pressure rates higher.

Other economic data revealed mixed results today.  According to the Commerce Department housing starts increased by more than expected last month but housing permits (a sign of future construction activity) dropped.

Industrial production & capacity utilization grew by a slower clip than was expected in January but December’s previously released figures were revised higher.

Overall, the interest rate markets are concerned about inflation.  We switched to a locking position yesterday and will maintain that stance today.

Current outlook: locking bias