Good news this week as inflation is not really showing up in the core PCE index – the Fed’s measure of inflation. It came in just under 1%. If you are a long time reader, you know that inflation is the main force that moves rates up or down. For this reason, and with the help of the Fed’s continued buying of mortgage backed securities, mortgage rates actually dipped a bit this week. QE2, which is Fed speak for printing money to buy U.S. treasuries and mortgage backed securities, will continue through June. The Fed is determined to keep rates low as the economy recovers. That said, we ARE seeing a recovery and personal income is up just a bit. At some point, either next week or in a month or two, you will see inflation creep into the market and even the Fed can’t keep rates from rising if inflation enters the picture.
The really surprising news, and the reason for your buyers to buy, is the fact that pending home sales skyrocketed over last month, coming in at 5% vs. 2.1%. The sales comparisons between now and a year ago don’t really show what’s going on since this time last year the numbers were artificially inflated by the government home buyer incentive. Looking at the month to month numbers clearly shows momentum is building. The ‘perfect house’ that buyers wanted just went under contract by someone else. Buyer, just so you know, if you snooze, you’ll loose. PLUS rates are STILL GREAT!
This week Freddie Mac’s 30 yr. fixed rate survey ranged between 4.75% and 4.875%.
WR Starkey Mortgage, LLP NMLSR # 2146
10 E. Campbell
Edmond, OK 73034