Consumer Price Drop May Help Mortgage Rates in Short Term
A dirty word as far as mortgage rates go, is “inflation”. The CPI numbers reported today showed a huge drop in consumer prices and a boost in confidence for those concerned about inflation in our economy. Consumer prices dropped by 1 percent last month, the largest amount in the past 61 years as gasoline pump prices dropped by a record amount.
The reaction to that announcement was met by a nice decrease to an already declining 10-year treasury yield. The current yield is approaching the January 2008 lows, which also offered the best mortgage rates by historical standards. While some worry that we could enter a period of deflation with continued drops in prices, most economists believe that current conditions are not likely to set the stage for a deflationary period, such as witnessed in the Great Depression.
The current mortgage spread premium continues to hover near all-time highs, which may hinder the full effect of the falling treasury yield, but expect at least a short-term dip in rates. Whether the dip lasts one day or several weeks, I will not venture to guess, as current market conditions are affecting mortgage rates at a furious pace.
On the negative side for housing, it was also reported today that construction of US homes fell by 4.5 percent in October as home builders have cut way back. This represents the lowest level on government records dating back to 1959. It appears that tighter lending standards, rising foreclosures, and fear of the housing market’s value have kept many potential homebuyers on the sidelines.
Look for continued government intervention to curtail the current housing slump. Hopefully it will come in the form of assistance to troubled homeowners along with programs aimed at stimulating buyers to step up and purchase homes. Home stabilization is the key to our ailing economy and future growth of our nation.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
The reaction to that announcement was met by a nice decrease to an already declining 10-year treasury yield. The current yield is approaching the January 2008 lows, which also offered the best mortgage rates by historical standards. While some worry that we could enter a period of deflation with continued drops in prices, most economists believe that current conditions are not likely to set the stage for a deflationary period, such as witnessed in the Great Depression.
The current mortgage spread premium continues to hover near all-time highs, which may hinder the full effect of the falling treasury yield, but expect at least a short-term dip in rates. Whether the dip lasts one day or several weeks, I will not venture to guess, as current market conditions are affecting mortgage rates at a furious pace.
On the negative side for housing, it was also reported today that construction of US homes fell by 4.5 percent in October as home builders have cut way back. This represents the lowest level on government records dating back to 1959. It appears that tighter lending standards, rising foreclosures, and fear of the housing market’s value have kept many potential homebuyers on the sidelines.
Look for continued government intervention to curtail the current housing slump. Hopefully it will come in the form of assistance to troubled homeowners along with programs aimed at stimulating buyers to step up and purchase homes. Home stabilization is the key to our ailing economy and future growth of our nation.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
Labels: business, economy, finance, money, mortgage rates, refinance, refinance rates
posted by Jim Bisnett at
10:51 AM
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