Bucking a recent trend of lower claims each week for unemployment insurance today the Labor Department announced that claims jumped to 412,000 for the week ending April 9, 2011. Climbing to the highest weekly level since mid-February the number comes as a bit of a shock and disappointment. With jobless claims over 400,000 economic recovery is difficult. The news had a positive impact on mortgage rates that was short lived.
Following the report on the increase in unemployment filings, the Commerce Department reported that the Producer Price Index increased 0.7% in March. Significantly lower than February's 1.6% increase the slow down in rising prices still countered whatever benefit mortgage rates gained from the unemployment claims report and then some.
A 5.7% increase in gasoline prices was a major factor in the price increase. Taking out food and energy costs for what is known as the "core" index, the PPI increased only 0.3% in March. Year over year PPI is up 1.9%, below the Fed's 2% inflation number--but add back in energy and food costs and PPI is over 6%. That is a concern.
Tomorrow we get the Consumer Price Index, what you and I pay for goods and services. Expect the core number to be tame but the gross number to be in line with PPI.
With these numbers I continue my advice to lock your rate in through your escrow period until/unless we see consistent data that trends rates lower. Mortgage Backed Securities, which determine interest rates, have had some large swings in daily trading and day-to-day. Volatile trading periods are no time risk your future mortgage payment by floating your rate lock.
Mortgage rates continue to remain low for the time being. Call or email Dennis today to determine your purchasing power for a new home loan or monthly savings from a refinance. Direct dial 562-472-1118
Dennis C. Smith, California Dept. of Real Estate Broker #00966315; NMLS #296660
Stratis Financial Corporation, California Dept. of Real Estate Broker #01269597; NMLS #238166
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