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…
Average mortgage rates jumped another 10 bps last week, edging closer to 8%.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.79%, up from 7.63%. A year ago at this time, the 30-year FRM averaged 7.08%.
The 15-year fixed-rate rose to 7.03% from 6.92%. A year ago, it averaged 6.36%.
“For the seventh week in a row, mortgage rates continued to climb toward eight percent, resulting in the longest consecutive rise since the Spring of 2022,” said Sam Khater, Freddie Mac’s Chief Economist.
“Rates have risen two full percentage points in 2023 alone and as we head into Halloween, the impacts may scare potential homebuyers. Purchase activity has slowed to a virtual standstill, affordability remains a…
Mortgage applications slipped again last week as treasury yields swelled to new highs.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – decreased by 1%, a more moderate decline than the week prior’s 6.9% dip.
Adjusted purchase applications slipped by 2%, while the unadjusted index fell by 2% from the week before and was 22% lower YOY.
Another spike in rates drove the decline. The 30-year fixed mortgage rate rose to 7.90%, the highest level since 2000 and a 20 bps jump from last week. Rates have risen nearly 70 bps in the last seven weeks.
“Ten-year Treasury yields climbed higher last week, as global investors remained concerned…
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…
Despite recent optimism surrounding the Federal Reserve’s “soft landing” strategy, economists at Fannie Mae are still expecting a mild recession next year.
Fannie Mae’s Economic and Strategic Research Group wrote in a note that mixed economic signals this month make it difficult to guess the near future, but a “modest contraction” in early 2024 remains the most likely outcome of the Fed’s inflation fight.
They cite consumption outpacing incomes, big differences between gross domestic product and gross domestic income over the past three quarters, and previous policy tightening still moving through the systems as signs of what’s to come.
Additionally, households are expected to restrict spending in the latter part of the year as inflated prices catch up to budgets.…
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 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,…
