The last full week of July has been a quiet one for mortgage-related news, but next week could be a very different story. In terms of macro-economic developments which could affect mortgage rates, the last one of any significance came on July 16 with the announcement of the Consumer Price Index (CPI) increase for June. Inflation and economic growth have been the two forces recently that have had a hand in driving mortgage rates upward. Two key growth-related announcements are due next week.
No news has been good news
Since the July 16 CPI announcement, there have been no further developments on the inflation front, in large part because CPI numbers are released only once a month. Significantly, though, the price of oil has been fairly stable since the middle of July, so that has not added any more fuel to the inflation fire. However, based on oil-price increases that had already occurred and their influence on other segments of the economy, expect to see more evidence of inflation when July’s CPI figures are released on August 15.
Inflation Is The Latest Threat To Mortgage Rates
With no significant developments on the growth front either, mortgage rates have settled down in recent weeks. They reached their 2013 high of 4.51 on July 11, before declining each of the next two weeks to reach 4.31. That’s still nearly a full percentage point higher than at the beginning of May.
Next week, the advance estimate of 2nd quarter Gross Domestic Product growth will be released, as will the job creation number for July. Strong figures in either or both cases could launch another upward move in mortgage rates.
Using the pause productively
As long as mortgage rates have calmed down, consumers have a chance to use the pause productively. Those who have been thinking about buying a home can run current rates through a mortgage payment calculator to see what price they can afford as things stand now. Any existing homeowner who hasn’t refinanced yet would do well to make comparisons on a refinancing calculator to see if they could still save money at current rates.
Either way, those consumers would do well to sit down with their loan calculators soon. Given the way both growth and inflation have been gaining momentum, mortgage rates may just be pausing temporarily before resuming their march higher.