Trouble ahead for mortgage rates? Bond yields hit 19-year high
Last week, the average 30-year fixed-rate mortgage increased to 6.76%, according to Freddie Mac, up from 6.71% the week before. Fifteen-year mortgage rates also jumped, rising to 6.09% from 6.04% seven days prior.
The Fed is scheduled to deliver its next rate decision tomorrow afternoon, with financial markets increasingly pricing in the possibility of a hike.
The CME’s FedWatch tool, a gauge of traders’ expectations for the central bank’s upcoming announcements, showed a 92.5% chance of a rate increase tomorrow, reflecting what traders see as growing unease by Fed decisionmakers about the inflation outlook amid the continuing Iran war.
The consumer price index (CPI) rose by 0.4% month over month in August, the Bureau of Labor Statistics (BLS) revealed last week, a result that experts said opened the door for a rate increase by the central bank.
First American senior economist Sam Williamson said that hotter-than-expected reading “puts another thumb on the scale” toward a rate hike by the Fed. “With the labor market still on solid footing, policymakers have room to lean harder against inflation,” he said.
