Key Updates on Interest Rates, Inflation, and the Housing Market

Hope you’re having a great week! I want to take a moment to update you on some important developments in the housing market and what they could mean for you.

Good News on Inflation

Interest rates have been holding steady near their best levels of the year thanks to a few factors. We saw a significant inflation report with the July Consumer Price Index (CPI) coming in at 2.9 percent, the lowest reading since March 2021. This is great news for the bond market, which dislikes inflation, and it’s also promising for potential interest rate cuts by the Federal Reserve in the near future. There’s even talk of a possible half point cut at the September meeting.

A key factor in the CPI report is the "Shelter" component, which includes rent, owners' equivalent rent (OER), and lodging away from home. Shelter alone makes up 90% of the overall CPI figure. Understanding this is crucial because it heavily influences the inflation rate, which in turn affects mortgage rates and the broader economy.

Mortgage Rate Trend

Speaking of mortgage rates, they’ve been relatively stable. And according to the latest survey published by Freddie Mac, average rates are now lower than they were for this same period last year by .60 percent, which is pretty significant! The trend is expected to continue downward as inflation cools off, which is encouraging for both buyers and sellers; however we can never fully predict what rates will do.

Refinance Activity Increasing

Refinance activity has also picked up as more homeowners look to take advantage of these lower rates. In fact, refinancing accounted for 35 percent of mortgage activity last week. Have you been holding off on refinancing because of the rate? Now’s a good time for us to take another look!

What I’m watching…

Looking ahead, there are a couple of events that could impact the market this week. On Wednesday, the Federal Reserve will release the minutes from their last meeting, which may give us more clues about their plans. Then on Friday, Fed Chair Jerome Powell will speak at the Jackson Hole Symposium, a gathering known for its potential to move markets.

As always, I’m here to discuss how these developments might affect your specific situation. Whether you're considering buying, refinancing, or simply curious about what’s next, don’t hesitate to reach out.