Market Update: Rates Unchanged; Consumer Price Index Coming Up This Week

Blog posted On August 08, 2022

Last week, mortgage rates trended higher. Throughout the week, they saw high volatility, fluctuating up and down. However, following the employment report on Friday morning, they began trending upward again. The employment report was overall better than expected – just not for the bond market. The number of jobs gains were higher than expected, but we are also seeing a reduction of output in terms of GDP specifically, which infers decreased productivity per worker. This is an inflationary signal, and the bond market (which influences rates), hates inflation.

This week, the consumer price index (CPI) is scheduled for release. The CPI tracks the changes in the average price of a fixed basket of goods and services sold to final consumers.  In June, annual inflation rose to a 41-year high of 9.1%, higher than the 8.8% expected. The core inflation, stripping out food and energy, climbed 5.9% – higher than the 5.7% expected. Core inflation peaked in March at 6.5% and has since been inching down slowly. Month-over-month, the CPI rose 1.3% and core CPI was up 0.7%, both higher than expected as well. Inflation is the enemy of bonds, which heavily influence the movement of mortgage rates. Recently, the Federal Reserve raised the benchmark interest rate another 0.75% in order to help combat high inflation. The subsequential pace of inflation will likely continue to be a large factor that the Fed takes into consideration for rate hikes going forward.

When trying to ‘time’ the market for buying a home it’s important to focus on the facts. The best way to learn about rate trends and market updates is to connect with us. Above all, buying a home has to be the right time for you – that’s the most important factor to ‘time’ when to buy. 

Sources: CNBC, Mortgage News Daily, MBS Highway