Weekly Mortgage Rate Commentary

Mortgage rates climbed higher last week on news that inflationary pressures could be heating up. The release of the minutes from the last Federal Reserve meeting also helped propel mortgage rates higher. It noted that once the economy appears to be in better shape the Fed may need to rapidly raise interest rates. While we may still dip into recession, the Fed's continued fight to add liquidity to the credit markets, the now signed economic stimulus package, and the debate beginning on another stimulus package does raise the probability that the economy will heat up in the not-too-distant future. Unfortunately, all this effort will likely create additional inflation.

This week again has the potential to see mortgage rates move significantly in one direction or the other. The first revision to 2007's 4th quarter GDP is due this week. Expectations are for a slight revision higher. A downward revision could calm bonds and help push rates back down. The Consumer Confidence Index is also due. If moods are stilling souring, rates could push downward.


Paul Cantor is a mortgage planner at TrustMor Mortgage Co., in Richmond, VA. He may be reached at (804) 433-1510 or on the web at www.PaulCantor.com