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.
- The yield on the ten year treasury has increased by 12 bps over the last week to 3.59% on Friday. The increase in the treasury rate was mostly attributable to stronger inflation fears as oil and gold prices have surged of late.
- The average annual inflation expectation in the U.S. over the next ten years increased by 17 bps to 2.64% from one week ago.
- The increase in mortgage rates has remained somewhat muted. The 30 year fixed mortgage rate closed Friday at 5.01% from 4.95% a week earlier.
- Stronger inflation will put upward pressure on long term interest rates. 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.