Mortgage Rates

Last week’s economic reporting included readings on monthly and year-over-year inflation and the preliminary reading on consumer sentiment from the University of Michigan. Weekly readings on mortgage rates and jobless claims were also released.

Gas Prices Drive High Inflation in March

Consumers felt near-record pain at the pump in March as gas prices continued to rise. Month-to-month inflation increased by 1.20 percent in March as compared to February’s month-to-month inflation rate of 0.80 percent. Analysts expected inflation to rise by 1.10 percent in March. The extent of rapidly rising gasoline prices on inflation is evident when comparing readings for the Consumer Price Index and the Core Consumer Price Index, which excludes food and fuel prices. The month-to-month Core Consumer Price Index reading for March was 0.30 percent; analysts predicted a reading of 0.50 percent growth, which matched February’s reading.

Year-over-year Consumer Price Index readings showed 8.50 percent inflation, which exceeded the expected reading of 8.40 percent, and February’s year-over-year reading of 7.90 percent growth in inflation. The year-over-year core   Consumer Price Index rose to 6.50 percent in March and matched analyst expectations based on February’s year-over-year core inflation reading of 6.40 percent.

Mortgage Rates, New Jobless Claim Rise

Freddie Mac reported the average rate for 30-year fixed-rate mortgages rose by 28 basis points to 5.00 percent last week; rates for 15-year fixed-rate mortgages averaged 4.17 percent and were 26 basis points higher on average. Rates for 5/1 adjustable rate mortgages averaged 3.16 percent and averaged 13 basis points higher than in the previous week. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages, and 0.90 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

First-time jobless claims rose to 185,000 new claims filed, which surpassed expectations of 172,000 new claims filed and the previous week’s reading of 167,000 new jobless claims filed. 1.48 million ongoing jobless claims were filed as compared to the previous week’s reading of 1.52 continuing jobless claims filed.

The University of Michigan released its Consumer Sentiment Index for April with an index reading of 65.7 as compared to the expected index reading of 64.1 and the March index reading of 59.4.

What’s Ahead

This week’s scheduled economic reporting includes readings from the National Association of Home Builders on housing markets, federal government readings on housing starts, and building permits issued. Weekly reporting on mortgage rates and jobless claims will also be released.

Last week’s economic news included remarks given by Federal Reserve Board Governor Lael Brainard and the release of the minutes of the most recent meeting of the Fed’s Federal Open Market Committee. Weekly readings on mortgage rates and jobless claims were also released.

Federal Reserve Leaders Prepared to Address Inflation

Lael Brainard, a Governor of the Federal Reserve Board, addressed the central bank’s concerns over rapidly rising inflation in her remarks made at a financial conference in Minneapolis, Minnesota. “Currently, inflation is much too high and is subject to upside risks. It is of paramount importance to get inflation down” Ms. Brainard concluded. “The Fed is prepared to take further action if inflation indicators and expectations indicate that such action is warranted.”

Ms. Brainard described the Fed’s strategy for controlling inflation as a series of interest rate increases and rapid reductions to the Fed’s balance sheet that may occur as soon as the Federal Open Market Committee meets in May.

Federal Open Market Committee Meeting Minutes Indicate Plan for Slowing Inflation

Minutes of the March meeting of the Fed’s Federal Open Market Committee outlined the Fed’s plans for controlling runaway inflation. The plan is not set in stone yet, but “many” FOMC members were on board with the proposals for reducing the Fed’s portfolio by $95 billion a month after three months and raising the Fed’s key interest rate by 0.25 percent during future FOMC meetings. Committee members originally planned to raise the Fed’s interest rate by 0.50 percent at each meeting but reduced proposed rate hikes to 0.25 percent due to the potential impact of the war in Ukraine.

Mortgage Rates Rise, Jobless Claims Data Mixed

Freddie Mac reported higher mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose by five basis points to 4.72 percent; the average rate for 15-year fixed-rate mortgages rose by eight basis points to 3.91 percent. Rates for 5/1 adjustable rate mortgages rose by six basis points and averaged 3.56 percent. Discount points held steady and averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Fewer new jobless claims were filed last week than in the prior week with 166.000 new claims filed as compared to 171,000 initial claims filed in the previous week. Continuing jobless claims inched up with 1.52 million ongoing jobless claims filed as compared to the previous week’s reading of 1.51 million continuing claims filed.

What’s Ahead

This week’s scheduled economic news includes multiple readings on monthly and year-over-year inflation and the University of Michigan’s consumer sentiment index. Weekly readings on mortgage rates and jobless claims will also be published. 

Last week’s financial and economic reporting included readings from S&P Case-Shiller Home Price Indices, the  Federal Housing Finance Agency and the federal government reported on construction spending. Reports on public and private-sector jobs growth and the national unemployment rate were also published along with weekly readings on mortgage rates and jobless claims.

S&P Case-Shiller: Home Price Growth Expected to Slow in 2022

National home prices grew by 19.20 percent year-over-year in January as compared to December’s year-over-year pace of 18.90 percent according to the monthly S&P Case-Shiller National Home Price Index. The 20-City Home Price Index revealed no change in the metro areas holding the top three spots for home price growth. Phoenix, Arizona topped the list with year-over-year home price growth of  32.60 percent; Tampa, Florida followed with a year-over-year home price growth of 30.8 percent, and Miami, Florida reported year-over-year home price growth of 28.10 percent. Analysts expect home price growth to slow in 2022 and into 2023. Affordability concerns and rising mortgage rates sidelined first-time and modest-income buyers in high-demand metro areas where multiple offers and cash buyers competed with buyers financing their home purchases.

In separate reporting, the Federal Housing Finance Agency also reported higher home price growth for single-family homes owned by Fannie Mae and Freddie Mac. Year-over-year home prices grew by 18,20 percent in January as compared to December’s home price growth rate of  17.70 percent.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages rose by 25 basis points to 4.67 percent. Rates for 15-year fixed-rate mortgages averaged 3.83 percent and 20 basis points higher than in the previous week. 5/1 adjustable-rate mortgages averaged 3.50 percent and were 14 basis points higher on average. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

Initial jobless claims rose last week with 202,000 new claims filed; analysts expected 195,000 new claims and 188,000 new claims were filed in the previous week. Continuing jobless claims fell with 1.31 million ongoing claims filed as compared to 1.34 million continuing jobless claims filed in the previous week.

Construction Spending, Jobs Growth Fall in February

The Commerce Department reported less construction spending in February than in  January. Spending rose by 0.50 percent as compared to the expected reading of 1.0 percent and January’s construction spending growth of 1.60 percent.

The federal government’s Non-Farm Payrolls report indicated that 431,000 public and private-sector jobs were added in March as compared to the expected reading of 490, 000 jobs and February’s reading of 750,000 jobs added. ADP reported 455,000 private-sector jobs added in March as compared to an expected reading of 450,000 jobs added and 486,000 private-sector jobs added in February. The national unemployment rate dropped from 3.80 percent to 3.60 percent in March.

What’s Ahead

This week’s scheduled economic reporting includes the release of the Federal Open Market Committee’s minutes from its last meeting and weekly readings on mortgage rates and jobless claims.