No Bull Agent

Mortgage Rate Update for the Week of July 11, 2010

Information in this post is provided by Greg Wickstrand, Home Loan Consultant for HomeServices Lending.  He is a guest blogger who provides us information from a lender’s perspective.  For additional posts by Greg, please visit his BLOG.

What’s Ahead for Mortgage Rates this Week:  July 11, 2010
By:  Greg Wickstrand

Mortgage markets improved again last week — if only barely — throughout a holiday-shortened week devoid of “major” data and market conviction.

Up-and-down trading characterized the week which ended with mortgage rates slightly lower versus the week prior.

Mortgage rates have fallen in 4 consecutive weeks and are on an extended rally that dates back to mid-April.

This week, however, data returns and rates could reverse. Especially with inflation numbers are in play.

Inflation is the enemy of mortgage rates.

Inflation is bad for mortgage rates because mortgage rates based on the price of mortgage-backed bonds.  When inflation pressures mount, the demand for mortgage-backed bonds wanes and that pushes bond prices down which, in turn, pushed bond yields (i.e. rates) up.

There’s three pieces of inflation-related news this week.

The first inflation-related story is the Federal Reserve’s Wednesday release of the minutes from its last meeting. Now, when the Fed adjourned June 23, it said “underlying inflation has trended lower“. However, there was more to the conversation that what the FOMC released in its post-meeting statement.

Markets will be looking for clues.

Then, Thursday, the Producer Price Index is released. Read the rest of this entry »

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