Mortgage Rate Markets Are Strong- We Are Seeing Best Rates in Months

Tuesday’s bond market has opened strong following the release of this morning’s Producer Price Index (PPI). The stock markets have not had the same reaction to the news though. The Dow is currently down 18 points while the Nasdaq is nearly unchanged form yesterday’s close. The bond market is currently up 14/32, which will likely improve this morning’s mortgage rates by approximately .250 of a point.

The Labor Department posted August’s PPI early this morning, showing much weaker than expected results. The Index was forecasted to rise 0.2%, but actually fell a surprising 0.4%. This means that inflationary pressures at the producer level of the economy were much weaker than expected.

Late Thursday morning, the Conference Board will release its Leading Economic Indicators (LEI). This index attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market will probably fall and mortgage rates will rise slightly. If it shows weaker than expected readings, the bond market may rally and mortgage rates should fall. Current forecasts are calling for a decline of 0.2%.

What does all of this mean? A weaker economy will continue to keep mortgage interest rates lower- as was shown by the Producer Price Index release. However, a forecast of improving economic conditions could move the market and interest rates the other way- at least until the forecast is proven. To the consumer, this is a great window of opportunity to lock in on lower rates. If you are in the process of financing a home, this would be the day to lock your rate.

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