Despite Hints of Inflation, Rates Hold Steady
Investors continue to pour over inflation data for signs of increase. The Consumer Price Index (CPI) is the most widely followed monthly inflation indicator, and the readings for January were higher than expected. CPI was 1.4% higher than a year ago, which was the highest level since October 2014. Despite an upside surprise in the CPI inflation data and stock market gains, the strong US dollar and ultra-low oil prices helped mortgage rates end the week a little lower.
The US service sector has remained strong in 2016 and costs have been rising. In particular, shelter and medical costs have increased over the past year. Mortgage rates are highly influenced by the outlook for future inflation. If the trend toward higher inflation accelerates, it would be negative for mortgage rates.
Factors: Existing Home Sales will be released on Tuesday and New Home Sales on Wednesday. Durable Orders, an important indicator of economic activity, will come out on Thursday. The Core PCE price index, the Fed’s preferred inflation indicator, and the second estimate of fourth quarter GDP will be released on Friday.
Check back weekly for our Minnesota mortgage industry updates! For specific rates, contact your Tradition Mortgage loan officer.