Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights mortgage rates and inflation.

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  • The yield on the 10-year Treasury closed Friday at 3.43%, 16 bps lower than the previous week. The decrease in the Treasury rate was mostly attributable to a smaller than expected increase in the core consumer price index which increased by 0.1% in March from February. Analysts had expected a 0.2% monthly increase. Although prices excluding food and energy increased very modestly in March, the overall CPI increased by 0.5% in March and by 2.7% from March 2010.
  • The average annual inflation expectation in the U.S. over the next ten years remained relatively unchanged at 2.61%.
  • The 30 year fixed mortgage rate closed Friday at 4.95%, 6 bps below the previous Friday’s close.
  • Stronger inflation will put upward pressure on long term interest rates to increase. NAR is forecasting interest rates to increase to 5.6% by the end of 2011. The cost of financing a $170,000 home purchase with a 20% down-payment over 30 years would increase by approximately $600/year with a 60 bps increase in the mortgage rate.