Author: Eric BernsteinPublished:
Rates fall thanks to pretty good inflation data! Are rate cuts ahead? Is a buyers frenzy starting already?
Mortgage rates got back to doing what everyone wants them to do - FALL! After rising the first week in January, rates fell back around where they ended in 2023. The average 30-year fixed rate conventional loan ended the week at 6.57% (vs 6.56% at the end of 2023)!
Mortgage rates got back to doing what everyone wants them to do - FALL! After rising the first week in January, rates fell back around where they ended in 2023. The average 30-year fixed rate conventional loan ended the week at 6.57% (vs 6.56% at the end of 2023)!
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Inflation was the topic on everyone's mind last week, and overall, the reports were good, but not great, for homebuyers (and all Americans)!
But before we get to that, Consumer Credit reported on Monday, 1/8, and the numbers were WILD! Total consumer credit rose $23.7 billion in November, up from a $5.8 billion increase in the prior month (an over 400% increase month-over-month). According to CNBC, nearly 56 million Americans have been in credit card debt for over a year! The longer Americans feel forced to finance their lifestyle using credit cards, the more defaults we'll begin to see, which will cool consumer spending and help slow inflation even more.
Inflation data started pouring in on Thursday, 1/11, and the report showed that we're still moving in the right direction.
CPI increased 0.3% month over month (vs. 0.3% expected) and 3.4% from a year ago (vs 3.2% expected) and Core CPI (the Fed's preferred inflation calculation). rose 0.3% for the month (as expected) and 3.9% from a year ago (vs. 3.8% expected). Annual Core CPI came it at the LOWEST percentage since November 2021! However, shelter costs, representing costs to rent or buy a home, accounted for TWO-THIRDS of the rise in inflation! Shelter costs and interest rates go hand-in-hand because the higher the interest rates, the higher the shelter costs as a vast majority of real estate transactions are financed. If prices aren't coming down (and there's no data to suggest they are), mortgage rates need to fall. Mortgage rates did in fact drop on the release of the report.
Finally, PPI -or Producer Price Index - came in on Friday and the numbers shocked. PPI measures the prices received by domestic producers of goods and services. PPI actually declined month-over-month (-0.1% actual vs 0.1% expected)! Good news for the Fed's fight against inflation and great news for the consumer as we should (hopefully) see these declines in prices trickle down to what consumers pay.
Inflation was the topic on everyone's mind last week, and overall, the reports were good, but not great, for homebuyers (and all Americans)!
But before we get to that, Consumer Credit reported on Monday, 1/8, and the numbers were WILD! Total consumer credit rose $23.7 billion in November, up from a $5.8 billion increase in the prior month (an over 400% increase month-over-month). According to CNBC, nearly 56 million Americans have been in credit card debt for over a year! The longer Americans feel forced to finance their lifestyle using credit cards, the more defaults we'll begin to see, which will cool consumer spending and help slow inflation even more.
Inflation data started pouring in on Thursday, 1/11, and the report showed that we're still moving in the right direction.
CPI increased 0.3% month over month (vs. 0.3% expected) and 3.4% from a year ago (vs 3.2% expected) and Core CPI (the Fed's preferred inflation calculation). rose 0.3% for the month (as expected) and 3.9% from a year ago (vs. 3.8% expected). Annual Core CPI came it at the LOWEST percentage since November 2021! However, shelter costs, representing costs to rent or buy a home, accounted for TWO-THIRDS of the rise in inflation! Shelter costs and interest rates go hand-in-hand because the higher the interest rates, the higher the shelter costs as a vast majority of real estate transactions are financed. If prices aren't coming down (and there's no data to suggest they are), mortgage rates need to fall. Mortgage rates did in fact drop on the release of the report.
Finally, PPI -or Producer Price Index - came in on Friday and the numbers shocked. PPI measures the prices received by domestic producers of goods and services. PPI actually declined month-over-month (-0.1% actual vs 0.1% expected)! Good news for the Fed's fight against inflation and great news for the consumer as we should (hopefully) see these declines in prices trickle down to what consumers pay.
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About the Author:
Eric Bernstein is the President and Co-Founder of LendFriend Mortgage, where he helps homebuyers make smarter, more confident decisions in today’s fast-moving housing market. With over a decade of experience guiding hundreds of clients—from first-time buyers to seasoned investors—Eric brings a mix of market insight, strategy, and personalized service to every mortgage transaction. Each week, Eric breaks down the housing and economic headlines that matter, giving readers a clear, no-fluff view of what’s happening and how it might impact their buying power.