Mortgage rates are priced slightly worse this morning.
Higher than expected inflation figures and optimism regarding Europe are putting pressure on mortgage rates to move higher.
The Labor Department’s monthly read on inflation at the retail level of the economy, known as “CPI”, showed higher than expected increases last month. However, when you strip out volatile food & energy prices year-over-year inflation grew at 2.0% which is palatable for Fed officials. Inflation is the primary driver of mortgage rates so this morning’s report is unfriendly for rates.
In an ongoing effort to curb contagion in the EU five major central banks around the world, including the Federal Reserve, announced a coordinated effort to pump liquidity into the European financial systemand help banks stay afloat during these challenging times.
The markets are obviously optimistic about the plan because stocks are trading higher and interest rates have inched up.
The aforementioned headlines are overshadowing otherwise weak economic data. Weekly jobless claims, industrial production, and manufacturing activity were all reported lower than expected today which would normally help rates remain low.
Since mortgage rates remain near all-time lows I will recommend locking in.
Current Outlook: locking bias