Mortgage Rates Move Higher Driven by Inflation Data

Mortgage rates moved higher this week, driven largely by inflation data.

The MBA application survey showed an overall decline due to a drop in refinance activity, while purchase activity remained strong. Producer prices increased in-line with expectations, while consumer prices increased more than most forecasts predicted. In addition, retail sales were strong, despite price increases, indicating further momentum for continued economic growth. If the economic recovery holds, this continuing inflation trend may increase the probability of the Federal Reserve instituting several rate hikes in 2022. Supply chain issues continue to be the dominant topic of conversation, with markets trying to ascertain when these issues may be resolved.

Any signs of continued struggles in the supply chain likely puts further inflationary pressure on interest rates in the near term.