New records in rates

Rates are at 20-year highs with the 30-year fixed rate mortgage up 49 basis points at 7.14% and the 15-year mortgage up 32 basis points at 6.37%.

current outlook:

The Federal Reserve seems determined to tamp down inflation despite obvious negative effects on the housing market; since last week, Federal Funds futures have jumped from a 56% to an 81% likelihood of another 75-basis point hike at the next FOMC meeting. Part of this has to do with wanting to avoid a repeat of Fed Chair Volker’s policy mistake in 1980 when he cut rates too quickly from 16% to 11%. Two months later, he was forced to hike rates up to 19% when inflation refused to wane. Another reason is that housing prices are greatly inflated after appreciating nearly 40% over the last two years. While the Fed is not swayed by effects in real estate, they will be paying close attention to the Consumer Price Index (CPI) which comes out tomorrow. In particular, they will be analyzing changes in the service sector, which tends to be less volatile than manufacturing. Depending on what it reveals, mortgage rates could stay within range or break yet another record.

New records in rates

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