This week the upward push on rates continued because the economy continues to do better:
1. Initial Jobless Claims and Housing starts were both better than expected;
2. The Philly Fed Manufacturing Index was almost twice as strong as expected;
3. Retail Sales ex-auto was twice as good as expected;
4. And both the producer price index and the consumer price index came in higher than expected.
With economic growth comes the fear that inflation will return. For now – deflation fears have left the building, and the Fed appears to be on track with their goal of stimulating inflation. As I have said before, this drives rates up.
Also, the Dow reached levels not seen since Lehman collapsed over two years ago and this has caused outflows from the bond market (mortgages are bonds) to the stock market. This also forces rates up in order to entice investors keep buying bonds instead of stocks.
So, while it took six months for rates to drift down to their historic lows in October, it has only taken six weeks to see those rates disappear.
State Bond Money still available with a rate of 4.75% and 3.5% down payment assistance. Must close by the
4th of February 2011 so would need to have a contract soon to take advantage of this program.
This week 30 yr. fixed rates ranged between 4.5% & 4.875% depending on program, credit and points.
Sr. Loan Officer
NMLSR # 217991
OK License # MLO01963