Mortgage Rates Retreating Following Soft Inflation Data

Unexpectedly, we are now seeing the inflation readings this week come in soft, helping to keep mortgage rates on the lower side. We still have some key economic reports out on Friday that could impact that direction of rates. Long-term, the expectation is still for rates to move higher so borrowers will likely want to lock in a rate soon.

Where Are Mortgage Rates Going?                     

>>> Inflation data comes in soft – keeps rates from rising

At the start of the week we knew we were going to be dealing with several important inflation reports that could impact the direction of the markets.  Last Friday we got a softer than expected average hourly earnings reading in the monthly jobs report for February, so investors were eager to find out if that was a one-off instance or reflective of a broader trend.

After this morning’s weaker than expected Retail Sales and Producer Prices (PPI) reports, it is clear that inflation had a slow month in February. Yesterday’s CPI numbers were on target, but the market’s reaction was somewhat surprising as it acted one way, then retreated by the end of the day.  Today we are seeing the same reaction, but even more such.

Inflation talk has been center stage the past few months after we got some standout readings in several reports, but the situation has now tempered, leading financial market participants to believe that the Federal Reserve will not be raising the federal funds rate as aggressively in 2018 as some had been starting to claim.

This has caused investor appetite for bonds to increase somewhat, pushing down yields. The yield on the 10-year Treasury note, which is the best market indicator of where mortgage rates are going, is down to 2.81% today. That’s about nine basis points below the week’s high of 2.90%. Mortgage rates typically move in the same direction as the 10-year yield, so rates have improved over the last twenty-four hours.

Rate/Float Recommendation           

>>> Lock now, rates will be going up

Mortgage rates have slowed their climb over the last couple of weeks, which is good news for anyone looking to purchase or refinance. However, the consensus among market analysts is that they will continue to climb throughout 2018, so if you are thinking about locking in a rate sometime in the near-future, you are best bet is likely to do it sooner rather than later.