Mortgage rates declined last week, even with very high inflation indicators. In economic data released last week, both consumer and producer prices showed higher than anticipated increases. But investors continue to price in a potential recession in 2023, which may force the Federal Reserve to begin lowering the federal funds target sometime next year.
Mortgage rates declined last week, even with very high inflation indicators.
In economic data released last week, both consumer and producer prices showed higher than anticipated increases. But investors continue to price in a potential recession in 2023, which may force the Federal Reserve to begin lowering the federal funds target sometime next year. This has resulted in an inverted yield curve, where short-term treasury rates (2 year) are higher than medium-term rates (10 year), which tend to influence mortgage rates. Investors believe the Fed will continue to raise rates in the short term but will have to begin easing once inflation slows and the economy likely slips into a recession.
Markets will be focused on housing data this week for new construction and existing home sales to understand potential impacts of home prices on supply, demand and inflation readings.
