Weekly Mortgage Update for Week of May 30th

Happy Memorial Day! We hope you all had a great and relaxing holiday weekend! We continue to benefit from the muted economic data along with the renewed uncertainty in Europe. Strong job postings that beat expectations will send rates upward as March payroll numbers are released Friday. Neutral-looks for rates to drift sideways will be the trend this week in anticipation for Friday's numbers. If the numbers beat estimates, rates will increase .125-.25%. Stay tuned to Friday's numbers...and if you are looking to purchase or refinance now would be a great time to lock.

Market Update for Week of May 16

On the mortgage front, rates have been bumping around a narrow trading range the last couple of weeks and ended last week nearly unchanged. Although the Consumer Price Index (CPI) inflation data came in slightly higher than expected on Friday, mortgage rates were resilient and even nudged a hair lower after the news. While Core CPI remained well below the Fed's target range around 2.0%, it was up from 1.2% last month and 0.8% at the end of teh last year, meaning that the trend has clearly been moving higher.

Inflation is negative for mortgage rates, so the question is why mortgage rates remain at the lowest levels of the year despite rising inflation data. The likely answer is that investors expect that the majority of the increase in inflation has already taken place. Fed officials have maintained that they expect the inflationary effects of higher oil prices to be "transitory", and the recent drop in oil prices has supported the Fed's position. Meanwhile, wage growth, a major factor in inflation levels, has been minimal in recent months. For these reasons, current inflation expectations remain relatively low.

Rate outlook for this week of May 9-13, 2011

We had some mixed economic news last week as the employment numbers showed the country increased payrolls by over 200k, but the unemployment rate moved upward to 9% as more people were actively looking for work. This mixed news seemed to soothe the bond market and therefore mortgage rates remained steady.

Week in Review for the Week of May 2, 2011

Here is the rate outlook for the week:

Factors: The March Payroll numbers are released on Friday, May 8. Possible terrorist retaliation for Bin Laden deaht may have some implications for financial markets.

Trend: Neutral-Look for rates to drift sideways in anticipation of Friday's numbers. If the numbers beat estimate, rates will increase .125-.25%.

Volatility: Lower leading up to Friday.