Mortgage Rates Touch Highest Levels in Four Years
Mortgage rates retreated late last week from the four-year highs they had touched during the previous week. The typical 30-year fixed mortgage rate quoted on Zillow is now 4.39 percent – down about 5 basis points over the past week.
Incoming data continue to point to a tight labor market: Private payroll data reported today showed a strong gain, and the annual gain in Personal Consumption Expenditures – the measure of inflation most closely tracked by the Federal Reserve – touched the central bank’s 2 percent target for the first time in a year.
The Federal Open Market Committee (FOMC) – which sets interest rate policy – acknowledged rising inflation in its May policy statement today confirming expectations that the Committee could hike interest rates at its June meeting.
All eyes now are pointed to this Friday’s jobs report. Private payroll data suggest that it should be another strong month for employment gains, but financial markets are likely to pay closer attention to the trend in wages. Although wage growth has picked up recently, it lagged for much of the economic recovery and has proven to be one key headwind to a faster increase in interest rates.
