Mortgage Rate Commentary Week of June 8, 2008

Long-term mortgage rates continued to experience some minor upward pressure last week, while short-term rates dipped a bit. The biggest news of the week was not as big as it could have been. The Labor Department reported that the unemployment rate rose to 5.5% - a jump of 0.5%. While an increase of this scale has not been reported in 33 years, the data came with a note of caution. There has been a large influx of entry-level workers, teens, and college graduates hitting the market. This may have caused some statistic "noise" that skewed the rate. On a more positive note, the economy lost only 49K jobs when 70K or more were expected to have been lost.

With no clear-cut signs of economic momentum one way or the other, we continue to be more concerned with inflationary pressures in the marketplace. At the end of the week, the Consumer Price Index is released. If we get another surprise drop in the core reading, we could see mortgage rates staying flat. However, a higher-than-expected reading would drive mortgage rates upward.