Mortgage rates declined slightly last week.

Inflation data released last week came in below market expectations, resulting in interest rate declines and a rally in equity markets. Investors viewed this data as an indication that the Federal Reserve may not have to increase short term rates as much as previously estimated. While both consumer and producer prices showed increases in July, the rate of increase slowed substantially. Even with the decline in rates, the Mortgage Bankers Association reported that mortgage applications last week were at the lowest level since 2000, due to slower demand and affordability challenges given rising home prices and high mortgage rates.

Markets will be focused this week on details in the release of the FOMC minutes from their July meeting and comments from several Fed officials later this week for any indications of future Fed rate actions.