Weekly Mortgage Update
|Inflation was back in the picture this week as the core the consumer price index came in at an annualized rate of 3.6%, which pushed rates up. Remember, the people who lend their money to Fannie & Freddie need to adjust their rate of return for what inflation takes away. So, when inflation goes up, rates go up to compensate.
But then concerns over riots in Greece created a mild panic and money flowed from the Euro-zone to the US bond market (of which mortgages are a part). And, as I said last week, if you are going to give me your money anyway so that it’s safe, I don’t have to pay you as much interest because you are going to buy my bonds regardless. This caused rates to tick back down. All in all, we ended up with basically no change in rates this week.
There was some good news on the housing front. Housing starts and building permits came in above expectations showing a reversal of last month’s decline. Foreclosures also surprised and are down from May of last year by 33%. Could we ACTUALLY be seeing a recovery? I think maybe.
This week Freddie Mac’s 30 yr. fixed rate survey stayed at 4.5%, depending on program, credit and points.
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