Atlanta Mortgage Rate Update - 4/17/2006

This past week saw yet another 1/8% increase in mortgage rates in Atlanta. We are currently on a steady trend in the wrong direction. We are recommending to all of our clients at this point to lock in their loans as early as possible. Even if your closing is 90 days out, it still makes sense right now to pay for the exteneded lock. If you are considering refinancing a 3/1 ARM that you got back in 2003, then now is the time. Do not expect fixed rates to head lower anytime in the near future.

What drove the rate increase last week? Mostly news from company earnings reports. This is the 12th quarter in a row where the S&P500 has seen double digit earnings growth. This is putting more money in the pockets of workers, driving more demand for goods, and finally causing an inflationary environment. Bond investors do not like inflation, so this drives bond prices lower. The end result is that mortgage rates will continue to climb until it becomes clear that inflation is under control.

This week we will get numbers on both the PPI and CPI as well as crude oil inventories. The biggest day is Wednesday before the market opens with the CPI report being released.