Mortgage Market Guide - Warm and Sunny on Cool CPI Numbers

We're ended up today seeing a 34 bps improvement in price on mortgage backed securities today and the Core CPI came in slightly lower then expected. If this holds we'll see an improvement in rates on Monday that combined with yesterday's improvement could be .125% in rate.

Reported today in MarketWatch -- "Higher energy prices drove the U.S. consumer price index up by 0.7% in May, its largest increase since Hurricane Katrina and the second largest in 16 years, the Labor Department reported Friday.

But while consumer inflation was scorching hot, the core rate of inflation -- which excludes food and energy costs -- rose just 0.1%. Read the full report.

Core inflation has thus risen at a 2.2% rate in the past 12 months, the smallest gain in more than a year and close to the Federal Reserve's target range"

The market's are loving it right now, but we are heading to a ceiling of resistance and it will be interesting to see if we can break through. We also saw China poised to increase their Prime rate. The markets had an initial knee-jerk reaction and then pressed forward with an even better price improvement.

It's also too early to tell if this is a trend, but at least we've had a couple days of good news!!

My recommendation would be to float any rate locks over the weekend.

Have a great weekend!! 

The above information was compiled from several sources that I subscribe to, including Barry Habib's Mortgage Market Guide and the Mortgage Commentary, but is mostly my opinion.

Larry Morris is a loan Officer with Equipoint Financial Network in Newberg, Oregon. He specializes in relocations and Sherwood, Oregon neighborhoods and Yamhill COunty. He is a Board Member of the Sherwood Chamber of Commerce.He can be reached at larry.morris@equipoint.com . His website is www.PDX-Mortgage.com . This material is copy protected 2007 by Larry Morris, Mortgage News that Matters. All Rights Reserved. His opinions do not necessarily represent the views of Equipoint Financial Network.

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