State of Rates
September 15, 2023
Latest Market Commentary.
For those keeping a watchful eye on the ever-fluctuating world of mortgage rates, the past week might have felt like déjà vu. Just as we hoped for a different tune, the same old song played on. As the week began, we were met with two major economic reports - August Consumer Price Index (CPI) and Retail Sales - and both brought unwelcome surprises. In this blog post, we'll delve into how this week's mortgage rates echoed the notes of the previous week, with rates inching up by around 0.125%
Hotter Than Expected: August CPI and Retail Sales
The stage was set early in the week with the release of the August CPI report. CPI is a critical metric, with a direct impact on mortgage rates. Inflation, the arch-nemesis of low-interest rates, has been a persistent concern over the past year. Unfortunately, the August CPI report did little to alleviate those concerns. Inflation remained hot, exceeding economists' expectations and causing mortgage rates to rise.
If that wasn't enough, Thursday brought us another economic performance, Retail Sales. Surprisingly, consumers continued to spend at a pace that surpassed expectations. While strong consumer spending can signal economic growth, it also fuels inflation concerns and contributes to rate hikes.
The Fed Meeting on the Horizon
As we look ahead to the latter half of September, there's little room for optimism among rate watchers. Investors are still digesting inflation data, and the Federal Reserve's upcoming Federal Open Market Committee (FOMC) meeting on September 20th looms large on the horizon.
While it's unlikely that the Fed will raise rates at this meeting, their forward guidance is crucial. The central bank's messaging will likely point towards a future where rates stay higher for an extended period. The Fed is closely watching indicators like CPI and employment, and until there's clear evidence of a sustained drop in inflation and a strong labor market recovery, higher rates may be here to stay.
Buckle Up for the much anticipated Fed Meeting next week.
Your Weekly Market Movers.
Wednesday
Fed Press Conference at 2:00 pm
Fed Interest Rate Decision at 2:00 pm
FOMC Economic Projections at 2:00 pm
Should I Lock or Float?
Until the data tells us otherwise, our bias is towards locking rates at application vs. floating until the data tells us otherwise. If you are greater than 60 days out and have the appetite to gamble, there is potential upside by waiting until you’re 30 days out.
The Housing Market in Three.
1.) Purchase apps down 2% last week.
2.) Realtor.com reports weekly active inventory down 5.1% YoY and new listings down 7.1% YoY.
3.) There are currently 509,000 active homes on the market, up a hair from last week and down 7% from a year ago today.