Author: Eric BernsteinPublished:
Last week was another BIG week for mortgage rates. Inflation not only continued its trend towards 2%, but CPI fell MORE than expectations - hitting a critical 3% year-over-year metric.
Not to pat myself on the back too hard, but just as I said last week, the 3% reporting caused nice drop in interest rates. The average rate on a 30-year fixed rate conventional loan fell to 6.76% (down from the 6.89% I reported last week).
Not to pat myself on the back too hard, but just as I said last week, the 3% reporting caused nice drop in interest rates. The average rate on a 30-year fixed rate conventional loan fell to 6.76% (down from the 6.89% I reported last week).
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Another Lower Inflation Report
For the third month in a row, we saw CPI come in at or below expectations, which is a huge sign of relief after the trouble we ran into during the early parts of 2024.
The consumer price index DECLINED 0.1% from May, a first in years, which puts the 12-month rate at 3%, around its lowest level in more than three years!
Rents rose more slowly in June, an encouraging sign of progress in what has been one of the most stubborn — and important — categories in the inflation data. While shelter costs are still going up, they went up less than they had in prior months and when paired with the decreasing costs in other areas (like used cars) we saw a nice drop in inflation.
Don't forget, we don't need to see inflation get to 2% before the Fed starts cutting rates, we just need to see a significant trend, which is what has been building from the April, May and June CPI reports. If this trend continues, we will see the Fed start cutting rates in September.
Chicago Fed President Austan Goolsbee told the Financial Times on Friday, July 12th, “I definitely feel better [now than on Monday],” Goolsbee said. “It’s not just this week, but the data over the past two to three months point to a continuation of what happened in 2023, which was a rapid and very significant drop in inflation.”
Powell Talks To Congress
Before the game-changing CPI numbers came in, Powell spoke to Congress and the rhetoric was more of the same we've heard from him since inflation started ticking up earlier this year.
When it came to rate cuts, Powell said “We do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%."
Powell is always concerned with the Fed's "dual mandate" - low inflation and maximal employment. While lawmakers expressed concerns that leaving rates this high will continue to deteriorate the job market, Powell expressed his belief that the labor market is still very strong. We'll see how the labor market holds up over the next few months.
The Trump Assassination Attempt
A last second head turn saved Donald Trump's life during a rally shooting on Saturday afternoon in Pennsylvania. The shooting that left one person dead and two people critically injured was a shocking moment for this country.
Many are speculating that this event will boost Donald Trump in the polls as independent and right leaning Democrats will now look more favorably at Trump. Whatever the case may be, political turmoil, and specifically political violence, is traditionally bad for rates. As of now, the markets seem to be unaffected because thankfully the former president is okay and the Republican National Convention will kickoff this week, as scheduled.
RATE CUT WATCH:
San Francisco Federal Reserve Bank President Mary Daly said in a group interview held by phone last week - "With the information we have received today, which includes data on employment, inflation, GDP growth, and the outlook for the economy, I see it as likely that policy adjustments, some policy adjustments, will be warranted." Daly has traditionally been slow to support rate cuts, so this is great news for homebuyers!
IF we continue along the path we are on now, chances of a September rate cut are practically guaranteed. There's a 92.5% chance of seeing a rate cut on September 18th.
Mortgage rates are currently the lowest they've been since March 2024 and we are just 0.25% from the lowest point in the last year. I hope this trend continues as I expect we'll continue to see more and more data to support rate cuts in the near future.
Another Lower Inflation Report
For the third month in a row, we saw CPI come in at or below expectations, which is a huge sign of relief after the trouble we ran into during the early parts of 2024.
The consumer price index DECLINED 0.1% from May, a first in years, which puts the 12-month rate at 3%, around its lowest level in more than three years!
Rents rose more slowly in June, an encouraging sign of progress in what has been one of the most stubborn — and important — categories in the inflation data. While shelter costs are still going up, they went up less than they had in prior months and when paired with the decreasing costs in other areas (like used cars) we saw a nice drop in inflation.
Don't forget, we don't need to see inflation get to 2% before the Fed starts cutting rates, we just need to see a significant trend, which is what has been building from the April, May and June CPI reports. If this trend continues, we will see the Fed start cutting rates in September.
Chicago Fed President Austan Goolsbee told the Financial Times on Friday, July 12th, “I definitely feel better [now than on Monday],” Goolsbee said. “It’s not just this week, but the data over the past two to three months point to a continuation of what happened in 2023, which was a rapid and very significant drop in inflation.”
Powell Talks To Congress
Before the game-changing CPI numbers came in, Powell spoke to Congress and the rhetoric was more of the same we've heard from him since inflation started ticking up earlier this year.
When it came to rate cuts, Powell said “We do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%."
Powell is always concerned with the Fed's "dual mandate" - low inflation and maximal employment. While lawmakers expressed concerns that leaving rates this high will continue to deteriorate the job market, Powell expressed his belief that the labor market is still very strong. We'll see how the labor market holds up over the next few months.
The Trump Assassination Attempt
A last second head turn saved Donald Trump's life during a rally shooting on Saturday afternoon in Pennsylvania. The shooting that left one person dead and two people critically injured was a shocking moment for this country.
Many are speculating that this event will boost Donald Trump in the polls as independent and right leaning Democrats will now look more favorably at Trump. Whatever the case may be, political turmoil, and specifically political violence, is traditionally bad for rates. As of now, the markets seem to be unaffected because thankfully the former president is okay and the Republican National Convention will kickoff this week, as scheduled.
RATE CUT WATCH:
San Francisco Federal Reserve Bank President Mary Daly said in a group interview held by phone last week - "With the information we have received today, which includes data on employment, inflation, GDP growth, and the outlook for the economy, I see it as likely that policy adjustments, some policy adjustments, will be warranted." Daly has traditionally been slow to support rate cuts, so this is great news for homebuyers!
IF we continue along the path we are on now, chances of a September rate cut are practically guaranteed. There's a 92.5% chance of seeing a rate cut on September 18th.
Mortgage rates are currently the lowest they've been since March 2024 and we are just 0.25% from the lowest point in the last year. I hope this trend continues as I expect we'll continue to see more and more data to support rate cuts in the near future.
Key reporting dates this week:
Mon, 7/15: Empire State manufacturing survey, Powell speaks
Tues, 7/16: U.S. retail sales, Import price index, Home builder confidence index
Wed, 7/17: Housing starts, Building permits, Industrial production
Thurs, 7/18: Initial jobless claims, U.S. leading economic indicators
Fri, 7/19: New York Fed President Williams speaks
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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.