Today's economic news was generally supportive of the prospects for steady to fractionally lower mortgage interest rates. Consumer inflation was subdued in October and new home building slumped to it lowest level in more than 18 months.
The Labor Department said its Consumer Price Index rose 0.2% last month -- after edging up 0.1% in September. Excluding the more volatile food and energy price components, the so called "core" cost-of-living was flat for a third straight month in October. On a year-over-year basis the core consumer price index has risen by 0.6% -- the smallest gain since the Labor Department started keeping records of this inflation measuring series in 1958.
In a separate report, the Commerce Department said housing starts plunged by 11.7% in October. The lion's share of the decline in the housing starts figures was contributed by the multi-family component of the data. Starts of single-family homes were up 1.0% last month. Overall, building permits were 0.5% higher in October - with the single-family component of the data posting a 1.0% gain.
According to data compiled by the Mortgage Bankers of America interest rates near record-lows failed to prompt an increase in loan applications last week. While 30-year fixed rate mortgages hovered near the all-time low of 4.21% during the week ended October 8th -- overall loan demand slumped by 14.4% from the prior week. The sizable week-over-week decline was largely the result of a 16.5% drop in refinance applications. Demand for loans to purchase a home slumped by 5.0% over the same period. During the survey week the contract rate for 30-year fixed mortgages climbed 18 basis-points higher to 4.46%, up by 12 basis-points from four weeks prior, and down by 36 basis points from the year earlier mark.
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