Daily Market Update 2/7/11

Mortgage rates inched higher Monday as strength in the stock market hurt mortgage-backed securities. Investors are expressing growing concerns over the prospect of higher inflation in the months ahead. The yield curve, the difference between short- and long-term interest rates, has been rising as the Fed continues to hold short-term rates at historic low levels, while investors are pushing long-term rates higher. The rate difference between 30-year fixed and 5/1 adjustable rate mortgages is now at an all-time high. So-called “hybrid ARM’s” have been attracting renewed interest among borrowers in recent weeks.

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