Good Afternoon,
Yesterday’s report warned that inflationary concerns would most likely interfere in our quest for lower rates this week. This was proven to be accurate after today’s economic reports caused rates to move back up after yesterday’s drop. I have been seeing this coming for a while now. Banks increased rates twice since this morning.
Here is what’s going on:
- This morning’s Producer Price Index (PPI) showed higher results than expected, which translates into a huge threat of inflation to consumers. This is bad news for the bond market and mortgage interest rates. Consumer Prices have jumped 5% since last year, which has not happened since 1991.
- Industrial Production data in June also showed a much higher increase in output than was expected, which means manufacturing activity was much stronger last month. This is also bad news for bonds.
- Bernanke’s testimony and FOMC meeting is also due and I will be following that for you as well.
Simply Put: Consumer prices along with manufacturing activity have increased dramatically. Inflation and higher production hurts interest rates. Today’s mortgage rates are higher than yesterday and I suspect that the trend will continue throughout the end of the week.
Should I lock if I’m closing or plan to remortgage within:
- 15 days? YES
- 30 days? YES
- 45 days? YES
- 60 days? NO
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