Mortgage Rate Outlook April 2-6

Rates are likely to riseIt’s likely rates will rise this week. If you’re currently shopping for a home, ask your mortgage professional if they recommend locking your current interest rate. If you’d like personal recommendations on trustworthy, ethical mortgage pros, drop me an e-mail or give me a call (see “Contact Jay” on the bottom right panel).

Last Friday, the PCE Index was released. It showed the highest spike in consumer expenditures since last August – the rising cost of fuel most likely played a large part. This indicates inflation is on the rise. If consumers spend as much or more in April on commodities like food, electricity, and gas, it’s likely the Federal Reserve will raise the prime rate in May in an attempt to slow inflation. (To learn more about the PCE, see the post Mortgage Rate Update and Fed Primer below.)

Another factor that will play a part in the possible rise of both short and shorter-term mortgage rates is the release of the Jobs report this Friday. If this shows a sizable number of jobs were created last month, the case for hiking rates will be made even stronger.

New jobs are of course a good thing – but as the economy picks up speed, count on interest rates increasing in response.

Source Info:

“The Mortgage Market This Week” from The Bond Rate Monitor, 4/2/07

(Thanks to Chris Benfield at Century 21 Mortgage for providing the source material.)


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