Are Home Mortgage Interest Rates On The Rise?

Are Home Mortgage Interest Rates On The Rise? | by Jim Catalano

Maybe.

Last week we saw inflation on the rise with the Consumer Price Index (CPI) rising 0.2 percent from May. Also, the Core CPI, which excludes volatile food and energy prices also increased by 0.2 percent. If we look back over a year from June 2015 to June of this year, the Core CPI rose by 2.3 percent which makes for the hottest year-over-year rate since the financial crisis way back in 2008.

What does this mean to me?

While inflation has been a non-issue for almost a decade, there is now a greater potential that home mortgage interest rates could go higher despite other bond-friendly factors like the Brexit uncertainty, terrorism in the country and abroad, and other global economic weaknesses. This is because inflation reduces the value of fixed investments and home mortgage interest rates are tied to mortgage bonds.

The good news at least for now is home mortgage interest rates are near all-time lows.

Next week housing news and Initial Jobless Claims will get all the attention. Remember weak economic news generally will result in money flowing out of stocks and into bonds, helping bonds and home mortgage rates improve. The opposite effect happens with strong economic news which causes money to flow out of bonds into stocks, resulting in higher mortgage interest rates.

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