Mortgage Rates Still Uneasy After CPI Report

Mortgage rates are inching still in the wrong direction if you are looking to purchase a new home.  We got a Consumer Price Index reading that was underwhelming, signaling to investors that the Fed might not be reading to hike rates at an aggressive pace just yet. However, the good news was somewhat trumped by a presidential tweet conforming that Secretary of State Rex Tillerson is out and CIA Director Mike Pompeo is now in. Markets do not like political instability. In addition, the dollar has weakened because of the new trade war. This can drive up the cost of living for Americans.

Where Are Mortgage Rates Going?                     

>>> Rates are steady, but still moving up

Currently I am at Virginia Beach assisting my son who just got back from deployment get settled into his new place, but I never anticipated that it wouls snow as much as it did last night.  Now I know how the Northeast must feel, and I cannot wait to get back to the fickle weather of the Midwest. If there is anything more fickle than mortgage rates, it has been the weather that has hit in the last 30-days on the East Coast. 

Anyway, the big economic event for the day was the Consumer Prices Index.

Financial market participants were let down by the average hourly earnings reading in the monthly jobs report for February last Friday, and therefore eagerly anticipating another inflation reading today. In similar fashion, the CPI reading came in with a mere 0.2% rise from the previous month. Anyone looking for a breakout in inflation was sorely disappointed.

The resulting market reaction was what you would expect, stocks moving higher and Treasury yields moving lower. The yield on the 10-year Treasury note (which is the best market indicator of where mortgage rates are going), dropped down a few basis points right after the report was released. However, the 10-year yield has inched back up to where it started the day since then. Mortgage rates typically move in the same direction as the 10-year yield, so we are seeing rates just about flat on the day. 

Rate/Float Recommendation           

>>> Lock now before rates move any higher

Mortgage rates have increased dramatically so far in 2018. The end does not seem to be anywhere in sight, either, as many analysts are calling for the 30-year fixed rate to climb all the way up past 5% at some point this year. Given this expectation, the smart decision for most borrowers is going to be to lock in a rate as soon as possible. The longer you wait on a purchase or refinance, the more likely it is you’ll be paying more with a higher rate.