Mortgage Rates Move Lower on Data, June 16, 2010

By:: David Coster - MortgageLoan.com

Mortgage Rate Trend Direction Down

Economic Reports/Rate Impact Housing Starts, 8:30 AM ET, Moderate Rate Impact

PPI, 8:30 AM ET, High Rate Impact

Industrial Production, 9:15 AM ET, Moderate Rate Impact

Key News European Debt Crisis

Summary

Actual, measurable economic data will be the mover of mortgage rates today. At 8:30 AM ET this morning we received the results from several important measures of our economy. The Housing Starts report provides data on whether builders are confident enough to begin building on speculation (homes not sold at time of construction). The Producer Price Index is a strong indicator of inflation in the industrial sector. Higher inflation is an indicator of a growing economy and would be negative for mortgage rates (lower inflation would be positive for mortgage rates). Finally, Industrial Production figures are a measure of how much of our manufacturing capacity we are utilizing in the US. The higher the industrial production figures the stronger the economy and the worse for rates.

Impact of economic data released today

Housing starts were sharply lower than expectations showing that the economy is not growing strong enough to lift this troubled sector. The Producer Price Index showed low overall inflation, but modest inflation in key areas. Industrial Production figures clearly showed that that the manufacturing sector of our economy is growing. Taken together this data is mixed, but likely to result in lower mortgage rates when lenders initially price their loans this morning. Yesterday’s rate increases will likely be given back this morning.

Impact of international or political events

On-going worries over the debt of countries in Europe, and the poor economic data out of the US have driven European stock markets lower today. Some news sources are reporting that a major financial-aid package is being readied for Spain by the European Central Bank, the IMF and even the US Treasury. This can be viewed as either a positive or a negative, in that a solution is being developed or, to the country, the problems in Spain are quite severe. This story could move rates in the hours and days to come.

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