Mortgage bond prices remained near unchanged last week holding Delaware Mortgage interest rates steady. Trade continued to be extremely volatile with discount points rising and falling by as much as 1/2 on a near-daily basis. Once again, gyrating oil prices caused much of the volatility. The price of a barrel moved as much as $6.00 in a trading day. Rising oil prices stoked inflation fears and resulted in Delaware mortgage rate spikes. 

For the week, Delaware interest rates on government and conventional loans fell by about 1/8 of a discount point.

This week brings us the release of only three pieces of economic news in addition to the minutes from the last FOMC meeting. Only one of those three can be considered of high importance to the markets and mortgage rates, so we may see a fairly calm week for mortgage rates.

The producer price index data Tuesday will be the most important event this week. Leading economic indicators and the Fed minutes have the potential to cause mortgage interest rate volatility. The bond market closes early Friday ahead of the Memorial Holiday the following Monday.

The National Association of Realtors will give us the Existing Home Sales report on Friday morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a decline in sales between March and April.

Overall, it may be an interesting week for mortgage rates. We could see little movement in rates if the stock markets remain calm and the week’s data doesn’t reveal any major surprises. Tuesday’s PPI report is the single most important data of the week, but the FOMC minutes may also lead to some volatility in the markets. Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday Monday. These early closes sometimes lead to additional volatility bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.

Producer Price Index

The producer price index is a measure of prices at the producer level and is important because it is a primary inflation indicator released each month. Investors are typically able to gain an initial indication of inflationary pressures at the producer level from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario, PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component. This distinction between the two reports shows why most analysts view the CPI as a more accurate indicator of inflation.

Energy price increases have many analysts concerned about the threat of inflation. Market participants will gain valuable insight into potential volatility in the financial markets from the release.

If this week’s producer price index release indicates falling price pressures, Delaware mortgage interest rates may improve. However, if the PPI release indicates an increase in price pressures, Delaware mortgage interest rates may push higher.

Mortgage interest rates remain favorable. This week could result in market swings that are favorable or negative in nature. Considering the heightened possibility for mortgage interest rate volatility, a cautious approach to interest rate exposure is prudent.

If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713