Mortgage rates lower despite large jump in consumer prices…

Yesterday’s Producer Price Index numbers indicated that wholesale prices increased in July by 1.2% over the prior month.  This was the largest jump since the early 80s and more than twice the increase forecasted.  Generally speaking, inflation puts upward pressure on mortgage rates.  However, rates are now down as compared to the beginning of the week. Why is this? 

One explanation is that oil and other commodity prices have come down.  The huge inflation numbers from yesterday are a product of higher commodity prices from a couple months ago.  It takes time for higher prices to be passed down the line and it takes time for falling prices to filter through too.  Now that commodity prices have dipped, we can at least hope that inflation presures will mellow out in the coming months.  This is helping rates now and could help rates in the future.