First Time Home Buyers
Mortgage rates improved last week for the second straight week. Last week had very little data, very little market conviction, and rates traded in a narrow range all week. Fortunately, the band was pointed towards better rates.
This week marks another holiday-shortened trading week and the biggest predictor of mortgage rates should be the Producer Price Index due out Wednesday.
Producer Price Index is important to mortgage rates because of its role in inflation. PPI is akin to the Cost of Living-type measurement for consumers, but for business. As business costs rise, the thought goes, it’s not long before consumer costs rise, too. Businesses eventually pass on costs triggering consumer inflation.
Therefore, the PPI forecasts inflation and mortgage bonds hate inflation.
PPI expectations have revised downward this month, especially because last week’s data showed a deceleration in consumer prices nationwide. If PPI isn’t as weak as expected, mortgage rates will rise.
Other influential data this week includes Housing Starts, Consumer Confidence and Initial Jobless Claims.
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