As the week ends mortgage rates showed some signs of improving. This after several weeks of volatility and some increases.
The news on inflation was not as negative as investors may have feared, and the economic growth data was mixed. Reports on retail sales and industrial production were both below expectations, which helped keep mortgage rates in check.
While food and energy prices have been rising globally, overall inflation levels have generally stayed generally low. The big monthly US inflation reports released this week revealed that core inflation remained low in January, but that it has moved higher over recent months.
January CPI was a 1.6% higher than one year ago. Core CPI, which excludes food and energy, was only 1.0% higher than a year ago. These increases are view to be modest.
This week the Fed also raised its forecast for 2011 GDP growth to 3.65% from their November estimate of 3.30%. Surprisingly the Fed lowered its forecast for 2011 core PCE inflation levels, despite increases in energy and raw materials. With all the recent evidence of rising prices, lower inflation predictions were not expected.
Interest rates in Maine have followed this national trend, and ended the week ever so slightly down from a week ago. At week’s end the average conventional 30 year interest rate, with 20% down, was fractionally below 5%. Some FHA loans were at 4.75%.