Monday, May 12, 2008

Mortgage Rate Commentary Week of May 11, 2008

Last week, mortgage rates held steady again as the week's economic indicators continued to reveal an economy that is neither growing nor shrinking. The most positive news of the week was the ISM Services Index surprise 52.0 reading. Any reading over 50 is considered to be a sign of growth in the service segment of the economy. Analysts had expected the index to hold steady around 49.5.

This week has three very important monthly economic reports: Retail Sales, Industrial Production, and the Consumer Price Index, If Retail Sales and Industrial Production both show unexpected signs of strength, we could see some upward movement in mortgage rates. However, the CPT could trump such a situation by coming in lower than anticipated. With inflation fears all over the market, any signs of weakening inflation would be very positive. The bond market would likely rally with mortgage rates stepping down slightly. The worst case for mortgage rates would be a spike in the CPI with great economic news. This might increase the odds of the Fed increasing rates fairly soon.

If you would like to receive weekly market updates via email, contact Paul Cantor, CMPS, TrustMor Mortgage Co., (804) 433-1510 or on the web at www.PaulCantor.com .

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