The Fed’s preferred inflation measure soared to a four-month high in September, increasing the likelihood of future Fed rate hikes.
The personal consumption expenditures price index tracks what Americans buy and for how much, offering a view into their spending habits. The core index, which excludes food and energy components, increased by 0.3% in September.
When adjusted for inflation, consumer spending rose 0.4%.
The data comes on the heels of news that the economy grew by 4.9% in Q3 2023, the fastest pace in two years and more than expected. Consumers once again waved off recession fears, but the increase puts the Central Bank in a tough position as it battles inflation.
Analysts generally maintain that another increase won’t come…
By KIMBERLEY HAAS
The president and CEO of the Federal Reserve Bank of Philadelphia knew he was facing a tough crowd when he took the stage during a Monday morning session at the Mortgage Bankers Association’s annual convention and expo.
“I stand here this morning fully aware of the mood in this room and I am also fully aware of the way the actions we on the FOMC have taken over the past 18 months in our efforts to tame inflation to get it back to a 2% annual target have, in their own way, contributed to the current mortgage climate,” Patrick Harker said.
Harker said he met with community members this summer to see firsthand the impacts that monetary…
By KIMBERLEY HAAS
The Mortgage Bankers Association’s chief economist and his team had some good news for those in attendance of their annual convention and expo on Sunday afternoon.
Total mortgage origination volume is expected to be $1.95 trillion in 2024, up from the $1.64 trillion projected for 2023.
At the same time, volume is predicted to increase 19% by loan count, with 5.2 million loans expected next year.
Michael Fratantoni, chief economist and senior vice president of research and industry technology, said members just have to make it through the winter.
“In terms of origination volume, we think 2023 is the low point,” Fratantoni said, adding that many lenders have had five or six quarters of production losses.
In…
Mortgage rates climbed again last week following treasury yield gains in the wake of political turmoil and an unexpected jobs report spike.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.49%, jumping from 7.31%. A year ago at this time, the 30-year FRM averaged 6.66%.
The 15-year fixed-rate rose to 6.78% from 6.72%. A year ago, it averaged 5.90%
“Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed,” said Sam Khater, Freddie Mac’s Chief Economist. “Several factors, including shifts in inflation, the job market, and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation. Unsurprisingly, this is pulling back homebuyer demand.”
Chaos…
By PATRICK LAVERY
It wasn’t a reversal by any means, but the Federal Reserve Board voted Wednesday to maintain the federal funds rate target range.
Following the July unfreezing of June’s pause, that range is, for now, staying at 5.25% to 5.5%.
Federal Reserve Chairman Jerome Powell, in remarks to the press following the board’s latest release on monetary policy, stated once again his “dual mandate” to stabilize prices while keeping employment high.
“Given how far we have come, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” Powell said. “Real interest rates now are well above mainstream estimates of the neutral policy rate, but we are mindful of…
By PATRICK LAVERY
With the end of the third quarter of 2023 in sight, indications are that the Federal Reserve will pause hiking its federal funds rate this week – as it did in June before again raising the target range in July – and investors will be watching closely on Wednesday to see if Chairman Jerome Powell gives any indication as to what they might do to end the calendar year.
The FOMC’s course of action, while holding no direct bearing on mortgage rates, acts as a strong indicator of what direction those rates will go in next. According to Business Insider, a pause on the part of the Fed won’t do much to move mortgage rates, currently above…
By ERIN FLYNN JAY
Inflation has affected the housing market as higher costs of living puts more stress on the average person’s finances.
The average American household spent $709 more in July than they did two years ago to buy the same goods and services, according to Moody’s Analytics.
“High inflation of the past 2+ years has done lots of economic damage,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a post on X, the platform formerly known as Twitter.
Rick Sharga, President & CEO of CJ Patrick Company, said among other things, inflation makes it harder for renters to save money for a down payment, and as home prices tend to go up over time, the amount of…
By CHUCK GREEN
Mortgage rates are hovering around 7% as the summer winds down and with potential homebuyers facing high monthly payments for the few properties for sale, people are wondering when the Federal Reserve will loosen its grip on monetary policy so the housing market can free up again.
Last month, Chairman Jerome Powell announced the key interest rate would be lifted to 5.25% to 5.5% — the upper figure representing a level not seen since 2001, according to the Associated Press. Powell said that they don’t expect to reach their goal of 2% inflation until 2025, and they do not intend to cut rates until next year.
“The Fed’s rate hikes attempt to combat inflation, increasing mortgage interest…
By DESMOND LACHMAN
There is good news and bad news for the U.S. housing market. The good news is that by this time next year, mortgage rates will be substantially lower than they are today. The bad news is that by this time next year, the U.S. is more than likely to be in a meaningful economic recession.
The main reason for believing that next year we will have both lower interest rates and a recession is that the Fed is currently engaged in monetary policy overkill and that monetary policy operates with long and variable lags. Those lags are thought to be between 12 and 18 months. That means the economy, which is already showing clear signs of slowing,…
By PATRICK LAVERY
Six weeks ago, Federal Reserve Chairman Jerome Powell hinted that although the Fed was, at the time, pausing increases to its target range for the federal funds rate, the rate might be raised again several more times before the end of 2023.
Those waiting to find out if that was a threat or a promise got their swift answer on Wednesday, as Powell announced after the two-day Federal Open Market Committee meeting that the rate would be lifted to 5.25% to 5.5% — the upper figure representing a level not seen since 2001, according to the Associated Press.
Since early 2022, the key rate has risen 5 1/4 percentage points.
“We have covered a lot of ground,…
