Rates were steadily moving lower until yesterday when they shot back up in response to a higher-than-expected CPI (consumer producer index). As it stands, the 30-year fixed rate mortgage is up 3 basis points from last week at 6.28% while the 15-year mortgage is up 4 basis points at 5.44%.
The core CPI rose 0.6% in August, double the amount in July. The market has adjusted their predictions for next week’s Fed meeting accordingly, raising their rate hike estimates by 10 basis points. In other mortgage news, mortgage credit availability dropped 0.5% last month, which indicates tightening lending standards. Government loans didn’t see much change, but conforming loans fell 1.2% and jumbo loans fell 0.7%. This is in part due to declining demand for riskier loan programs, causing lenders to cut down on ARM and non-QM offerings. Buyer demand overall has also started to pull back with searches for “homes for sale” dropping 25% on Google compared to the same time last year. Similarly, requests for home tours and other services on Redfin fell 11% year-over-year. However, some prospective buyers are still optimistic, believing that less competition plus opening their searches up to smaller markets will result in affordable home buying.