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Mortgage Rates This Week – September 5, 2023

Last week’s economic data encompassed key indicators such as inflation, consumer sentiment, mortgage rates, and jobless claims.

Steady Inflation Rates in August

In August, the month-to-month inflation rate exhibited resilience, holding relatively steady at 3.18 percent. While this marks a slight increase from the 2.97 percent recorded the previous month, it stands significantly lower than the daunting 8.52 percent seen a year ago. When compared to the long-term average of 3.2 percent, inflation seems to be trending in the right direction.

July saw inflation rise at a pace of 0.20 percent, aligning with analysts’ expectations. There was no discernible shift in the month-to-month inflation pace, remaining at 0.20 percent growth, consistent with June’s figures. Additionally, the Consumer Price Index reported a year-over-year inflation rate of 9.10 percent, marking the highest reading since the mid-2022 peak, a 40-year high.

While we await core inflation figures, experts anticipate it to settle at around 3.38 percent. Core inflation, or the CPI, excludes the traditionally volatile food and fuel prices. If core inflation does indeed land at 3.38 percent, it would signify a notable decrease from the July reading of 4.7 percent.

Currently, the Federal Reserve’s decision regarding interest rate adjustments remains uncertain, hinging on several metrics, including the awaited core inflation data.

Mortgage Rates on the Rise, Job Market Cooling

The 30-year fixed mortgage rate, the industry-preferred benchmark, has held at approximately 7.53 percent. These rates represent the highest in the last two decades, surpassing July’s rates, which were just shy of 7 percent. This persistent rise in mortgage rates continues to exert pressure on potential homebuyers. Meanwhile, the 15-year fixed mortgage rate stands at about 6.81 percent, slightly up from August’s average of 6.55 percent.

Comparing this week’s mortgage rates to the previous week, the 30-year fixed rate has increased from 7.23 percent to 7.53 percent on average. The 15-year fixed rate currently rests at 6.81 percent, slightly elevated compared to last week’s 6.55 percent average.

The impact of rising interest rates is now evident in the job market, as unemployment edged up to 3.8 percent. In August, the economy added 187,000 jobs, numbers that, while still robust by historical standards, reveal a cooling job market in comparison to July.

University of Michigan Consumer Sentiment Survey

The University of Michigan recently unveiled its monthly consumer sentiment report, showing a slight dip compared to the previous month. The index reading was 72.0 in July but decreased to 69.5 in August. Similarly, the overall sentiment concerning the economy slipped from 76.6 in July to 75.7 in August.

These figures reflect some consumer apprehension about economic conditions. Despite a gradual decline in inflation, many consumers remain cautious due to the rising interest rates and the moderation in the job market. While overall sentiment remains positive, there is an observable cooling effect on the economy.

What Lies Ahead

In the coming week, we anticipate updates on mortgage rates, and the Federal Reserve will receive fresh economic metrics. These data points will carry significant weight for the Fed as it deliberates on whether to implement further interest rate adjustments in September to counteract ongoing inflation.

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