Mortgage Market Trend

The near-term trend trajectory for mortgage interest rates hinges on the current pace of inflation - both at the factory gate and on Main Street.

Market participants expect Wednesday's Producer Price Index (released at 8:30 a.m. ET) to show an overall gain of 0.8% driven by higher food and energy prices -- while Thursday's Consumer Price Index (released at 8:30 a.m. ET) is projected to show a composite gain of a more modest 0.3%. As long as the actual values for these two big inflation reports match or fall below their respective forecast mortgage interest rates will likely move sideways to perhaps fractionally lower. That's the good news. The bad news is that if one, or both, of these reports exceed the consensus estimate -- mortgage investors will almost certainly be quick to push mortgage interest rates higher.

This is not the time to aggressively take mortgage market risk - especially for loans planning to "lock" within the next five trading days.