Falling Mortgage Rates Show Inflationary Pressure Contained

by: Mark J. Perry
In another market-based indicator that inflationary pressures are contained for the time being and should not be a major concern, the fixed rate for 30-year mortgages fell to the lowest level in 2011: 4.55%. That's the lowest level since early December last year, six months ago, and only 38 basis points above the historical low level of 4.17% last November. It just doesn't seem like there could be any major inflationary pressures in the U.S. economy when 30-year fixed rates are so, so low.

Update: It's not just long-term mortgage rates that are falling and close to historical lows, the graph below of 15+ year yields for U.S. corporate bonds shows a similar pattern. And I don't think the Fed is buying these corporate bonds, and Fannie and Freddie are not backing them or buying them, so I don't think we can claim government manipulation of markets here?