Interest Rate Update provided by Grant Hickman, Premier Mortgage

Date: May 19, 2006

Interest rates remained mostly unchanged on the week despite a fair amount of volatility in the bond markets. Weakness in housing starts and building permits supported lower rates while a higher than expected increase in the Consumer Price Index (CPI) drove rates upward. Both the overall CPI and the core CPI, excluding food and energy, increased more than expected. Year over year, the overall CPI is up 3.5% and the core CPI is up 2.3%. Yesterday, two Fed officials indicated that the Fed may have to tighten short-term interest rates again at their June meeting to fight inflation. These comments supported lower rates.

Other economic reports of note included April Industrial Production and Capacity Utilization which were both stronger than expected. The Philadelphia Fed Business Index was also stronger than expected although the New Orders and Employment components of the index were weaker than expected.

Crude Oil prices are down over $3 on the week. The Dollar has improved versus both the Euro and Yen on expectations of another Fed rate hike and comments from the European Central Bank that the Euro has gotten too strong. A stronger Dollar should increase demand for US debt instruments and support lower rates.

Next week look toward Wednesday’s Durable Goods Orders, Thursday’s second read on first quarter GDP, and Friday’s Personal Income and Outlays as potential market moving events.

Current rate for a 30 year fixed loan is 6.625% with no points based on a $250,000 Purchase Transaction; $187,500 Loan Amount; 10-20% Down.

Current rate for a 15 year fixed loan is 6.25% with no points based on a $250,000 Purchase Transaction; $187,500 Loan Amount; 10-20% Down.

Current rate for a 5 year ARM is 6.50% with no points based on a $250,000 Purchase Transaction; $187,500 Loan Amount; 10-20% Down.

Posting info and rates provided:

Grant Hickman
Senior Loan Officer
Premier Mortgage Group, LLC
1844 Folsom Street
Boulder, CO 80302
303-449-8855
ghickman@pmglending.com