July 27th, 2009

Good economic news = rising rates



So it has always been — a strengthening economy presages rising interest rates, and mortgage rates are no exception:

A good rule of thumb to use when trying to discern the direction for mortgage rates is simply this: Bad economic news generally brings lower rates, while good economic news presages higher rates. Informed by concerns about inflation, and with varying degrees of intensity and duration, it’s as solid a guide as any you can find.

And, sure enough, home mortgage rates closed a bit higher on Friday; the 30-year conforming FRM hit 5.38%. That’s actually the highest it’s been in a month. As rates go, they’re pretty competitive now. But when, not if, inflation rears its head…

Inflation is one of, if not the, driving force behind rising rates. (For a full explanation of those driving forces, you’ll want to read What Moves Mortgage Rates? It’s one of our most popular pieces.) What with the Dow Jones Industrial Average cracking the 9000 mark last week, and other (if disputed) signs of so-called “green shoots” seemingly foretelling The End Of The Recession, inflation is going to be on investors’ minds. And inflation means higher mortgage rates as surely as spring precedes summer.

So without further ado, proceed to Encouraging News, So Rates Rise. And you could also take our latest Quick Survey — this time it’s on health-care reform.

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About the HSH Blog's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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