Home Mortgage Loans: You Should Wait To Lock Your Loan

Mortgage Bonds are trading lower this morning after the Personal Consumption Expenditure Index indicated that inflation climbed 0.8% in June. This is the highest jump in 27 years and represents the soaring energy prices and commodity prices in the past month.

These numbers are important because inflation is the archenemy of Mortgage Bonds and will normally push interest rates higher in the short term. In addition, these numbers indicate that inflation is slightly out of the Fed's desired range of 1-2%. Despite this, I expect the Fed to keep the Fed Funds Rate at 2.0% tomorrow afternoon when it announces its interest rate decision.

For now, I recommend cautiously floating because Mortgage Bonds appear to be gaining back some of their earlier losses. In addition, oil and commodity prices have come down in recent weeks, which may indicate better pricing is on the horizon.