Mortgage Rates Just Barely Lower Ahead of Key Inflation Data

Mortgage rates spent the entirety of last week at the same levels based on end-of-day rates sheets from the average lender.  That was a tremendously uncommon length of time for rates to remain unchanged and it was especially notable against the backdrop of recent volatility.  Today's rate sheet offerings came fairly close to extending the "unchanged" streak, but by the end of the day, lenders had improved just enough for the average to move 0.01% lower.

When we talk about 0.01% changes in mortgage rates, it's important to know that most lenders only offer rates in increments of 0.125%.  That's a much bigger move than we see on the average day, so lenders need a way to make adjustments beyond the rate itself.  They accomplish this with upfront costs and/or credits.  For instance, lower the upfront cost (or increasing the upfront credit) by a couple hundred dollars could easily reduce the effective rate by 0.01% even though the payment rate (or "NOTE rate") remains unchanged. 

Whereas today was fairly calm for markets and rates, tomorrow brings bigger risks.  This is primarily due to the release of an important report on inflation in the morning.  Inflation is one of the key threats to bonds, and bonds underlie interest rates.  If inflation comes in higher than expected, it could easily push rates higher.

This Daily Mortgage Rate Update is provided in partnership with Mortgage News Daily.