FHA Mortgage Rate Predictions: January 19, 2010

Inflation squeezes mortgage ratesMortgage markets traded in a narrow channel last week.  There was very little data and wasn’t much volatility in general.

For rate shoppers, the momentum proved favorable for the second straight week.

There again isn’t much data this week.  The biggest report of the week will likely be the Producer Price Index set for Wednesday.

The Producer Price Index is essentially the business equivalent of the Consumer Price Index.  The logic is that inflation at the business level will eventually cycle to the consumer.  If there is one thing that guarantees higher , it’s inflation.

Should inflation come in hotter than expected, mortgage rates will rise the week.  Should inflation come in softer than expected, mortgage rates will improve this week.

Other influential data this week includes Housing Starts, Consumer Confidence and Initial Jobless Claims.

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