Economic Data and Mortgage Rates

Each day, Prime or A paper mortgage rates tend to fluctuate a little bit. There is a positive correlation between the change in mortgage rates and the yield of the 10 year Treasury Bond. Each day economic data is released that affects the yield of the Bond Market, and thus also has an affect on mortgage rates. Most of the economic data are inflationary indicators; and mortgage rates tend to drop when inflation is being held in check. We will take a look at some of the various economic indicators that are released regularly that can influence mortgage rates.

There are many online sites that you can find the appropriate information about the economic data and mortgage rates that provides you with information about the 10 year treasury bond and other important info as well. Many mortgage companies subscribe to services that give them real time information about this economic data and mortgage rates so that they can remain ahead of their competition and lock in their client's interest rates ahead of rate increases.

One important economic indicator is the Consumer Price Index, or CPI. The CPI measures the cost of a variety of goods and the previous cost of the same goods. If the CPI goes up, this is an indication that inflation is taking place. This results in mortgage rates going up slightly as well.

Unemployment reports come out regularly as well. If the number of people filing for unemployment benefits increases, this is considered a sign of a weakening economy and interest rates tend to go down. If unemployment decreases, this is a sign of a strong, inflationary economy and interest rates tend to increase.

Another economic indicator that effects mortgage rates is the Producer Prince Index (PPI). Although its similar to the CPI, it measures price changes of products and services from the perspective of the producer. Higher PPI values can indicate that inflation is on the rise, and can cause mortgage rates to increase.

Economic growth is positively correlated to the change in rates. When the economic data indicates there is strong growth rates tend to rise. When the economic data indicates weak growth rates tend to fall.

» DISCLAIMER: The information contained in this article on 'Economic Data and Mortgage Rates' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.