News from HSH Associates:
As sometimes happens, while some interest rates rose this week, other interest rates eased back. Although seemingly contradictory, it works in the context of the market this week: while the Federal Reserve was busy lifting the Federal Funds target by another quarter-percentage point, mortgage interest rates eased back a bit, with the average 30-year FRM closing the week at 6.41%, according to the national mortgage pricing survey conducted by HSH Associates, Financial Publishers. The weekly survey also revealed a slight drop in the average rate for a five-one Hybrid ARM, which closed the week at 5.94%. Currently, it is expected that one or perhaps two more increases from the Fed are due, starting with the January 31 1 meeting, which will be Mr. Greenspan’s last as Chairman.
Retail Sales for November rose a solid but unspectacular 0.3%, a little below forecasts.
Consumer Price Indices represent at least some measure of the Fed’s level of success in combating inflation. For November, the headline CPI slid by 0.6%, helped along by falling gasoline prices, while the “core” CPI managed a 0.2% lift. For the year, CPI has risen by 3.5%, while the core has crept just 2.1% higher.
Mortgage rates are expected to drift a few basis points next week, probably lower.