Mortgage rates are on the rise this week due to increasing inflationary pressures.
The average rate on a 30-year fixed-rate mortgage has increased by six basis points to 6.74% APR in the week ending Sept. 10, according to rates provided by Zillow to BW. (A basis point is one one-hundredth of a percentage point.) Our weekly average is calculated using daily APRs recorded over the past five business days.
Market participants are anticipating the release of the latest Consumer Price Index on Sept. 11 from the U.S. Bureau of Labor Statistics. This report, which shows August data, is especially significant as the Federal Reserve is set to meet on Sept. 15-16. If consumer inflation exceeds the Fed’s 2% target, there is a higher likelihood that the Fed will raise its benchmark interest rate to combat inflation.
Currently, markets are pricing in a 70% chance of a quarter-point rate hike, according to CME FedWatch.
A strong jobs report gives the Fed room to hike
With rising energy prices due to the Iran war, inflation is expected to remain elevated. Economists predict that the August CPI report will show annual inflation similar to the 3.4% rate in July. However, there is a possibility of surprises, as evidenced by the unexpectedly strong job market report from the Bureau of Labor Statistics, which showed a growth of 162,000 jobs in August, three times more than expected.
The Fed’s decision on rate hikes is influenced by various factors, including inflation levels. The uncertainty surrounding the rate of inflation in August could sway the Fed’s decision.
The bond market isn’t buying it
This week, the Treasury Department announced an increase in its long-term bond buybacks to $6 billion per operation this quarter, triple the original amount. While bond buybacks can theoretically help reduce upward pressure on yields, investors remain concerned about government borrowing and ongoing inflation.
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August’s CPI steps onto a tough court
Given the current and anticipated inflationary pressures, the question remains whether the Fed will raise rates next week.
With various economic factors at play, including the job market and energy prices, the decision on rate hikes by the Fed is crucial. The upcoming CPI report for August will provide further insights into the inflationary landscape.
text in a different way. following sentence: “The cat sat lazily in the sun, enjoying the warmth on its fur.”
The cat lounged in the sunlight, savoring the cozy feeling on its fur.