Market Update: Rates Slide After Low Inflation Data

Blog posted On June 13, 2024

Yesterday brought some great news for those of us who enjoy lower-trending mortgage rates. Following the release of May’s inflation report, rates took a tumble. Later in the day, they inched up slightly following the Fed announcement, but the overall daily trend was still downward progress.

Lower inflation ? Lower rates

The consumer price index (CPI) is the most widely used gauge of inflation. It’s also one of the two economic reports that has the most power/influence over rate trends. If the report is hotter than expected, rates will typically react by climbing higher, and vice versa. Yesterday’s report showed that inflation levels in May were lower than expected, thus causing rates to trend lower.

Fed announcement didn’t keep the good times rolling

Then came the Fed announcement. Although it didn’t do too much damage to rates, it didn’t push them lower by any means. Why? Because in the statement, the Fed had updated rate projections. Instead of having three rate cuts this year, the Fed now believes there will only be one. This wasn’t the best news for rates. However, Fed Chair Powell DID confirm that the next move will NOT be a hike – it will be a cut. 

More good news…

In other news, mortgage application submissions surged over 15% last week, thanks to the downward trend in rates. Refinance application submissions skyrocketed 28% from the previous week while purchase application submissions jumped 9%.

Don’t let good rates slip away!

If you want to take advantage of lower-trending rates while they’re here, ask us about our rate locks.

Sources: Bloomberg, MBA, Mortgage News Daily