There were three especially noteworthy events concerning mortgages during the week of June 17. All of them point to a mortgage environment very much in a state of change, making mortgage calculators a key tool for figuring out how those changes can affect you in dollars and cents.
Three key events collide to cause uncertainty about interest rates:
1. May's inflation figure took some pressure off of interest rates. The prevailing trend over the past month or so has been that interest rates, including mortgage rates, have been rising on the basis of indications that the economy is getting stronger. One reason that interest rates rise on evidence of economic strength is that an active economy can bring rising prices. However, on June 18 the Bureau of Labor Statistics announced that the Consumer Price Index rose by just 0.1 percent in May, and by only 1.4 percent for the past twelve months. A benign inflation environment takes some of the urgency out of the need for interest rates to rise in response to a strengthening economy.
2. Speculation swirled around the latest Federal Reserve meeting. While the meeting that concluded on May 19 brought little in the way of new information, the financial markets are struggling to come to terms with the inevitable -- that the Fed's intervention to keep interest rates low will be scaled back as the economy strengthens. The Fed's meeting was the latest reminder of this, and in response the stock market plunged and bond yields moved sharply higher.
3. Mortgage rates halted their six-week climb. From early May to mid-June, 30-year mortgage rates had risen by 63 basis points, but now they've taken a 5-basis-point step back. With the progress of the economy still up in the air, it's anybody's guess whether the next move will be up or down.
With mortgage rate changes now coming fast and furious, one way to make sense of the volatility is to use a mortgage payment calculator to figure out how far, up or down, mortgage rates would have to move before it materially affects your plans. That way, you would have a range within which you would not have to be concerned with every zig or zag in rates. Only if rates move outside that range would you have to consult your mortgage calculator again and rethink your next move.