It’s always fun to report that rates trended slightly lower, according to last week’s report on the survey of average rates published by Freddie Mac. Since that report, rates have been relatively stable; however, with some big economic news coming up, things could get interesting.
The Federal Reserve continues to signal they won’t raise rates in the near future, but they’re also cautious about cutting them just yet. This means any improvements in mortgage rates will likely depend on upcoming economic data.
Here’s what caught my eye this week:
The Debt Ceiling – The U.S. continues to need to sell bonds to fund the government. While the latest auction wasn’t a disaster, it highlights that continued high demand for these bonds is needed to keep rates down. And if demand is light, the interest percentage on those bonds goes up to attract investors.
Labor Market Cooling – Initial unemployment claims are rising, which could be a sign the labor market is softening. If this trend continues, it could push the Fed towards a rate cut sooner than later.
The big event this week has been the release of two major inflation reports: wholesale inflation and the Consumer Price Index (CPI) report. Wholesale inflation in April was expected to rise 0.3 percent on the month versus a 0.2 percent rise in March. The actual came in much higher at 0.5 percent. The annual rate in April came in as predicted at 2.2 percent versus May’s 2.1 percent.
Regarding the CPI report on consumer inflation, the last hot CPI reading released in April caused a spike in interest rates. If this report comes in higher than expected, it could push rates back up. Overall prices, as well as the core, both rose an overheated 0.4 percent in March, with April consensus estimates at 0.3 percent for both. Annual rates, at 3.5 and 3.8 percent, respectively, didn’t show any improvement in March, with limited improvement expected for April, at 3.4 and 3.6 percent. We’ll see what happens!
The Bottom Line: Rates are holding steady for now, but the upcoming CPI report could be a game-changer. If you’re thinking about financing a home in the coming months, staying informed about all the economic factors that move rates is important. I’m always here to answer any questions you have about mortgage rates or the home-buying process. Let’s chat and see what options are available to you!
