01 Oct Rates breakdown

• Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June, according to the Freddie Mac Primary Mortgage Market Survey. The 30-year fixed rate came in at 3.01% – up 13 basis points. Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages which compound other labor and materials shortages. Experts at Freddie Mac predict the rise in mortgage rates will cause home prices to moderate slightly after increasing for most of last year.
• According to the National Association of Realtors, pending home sales rebounded in August, recording significant gains after two prior months of declines. NAR’s Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, increased by 8.1% in August. “Increased inventory of homes for sale, near historic low mortgage rates and favorable demographics means more housing demand. For the week of September 24, purchase applications are 6.3% higher than two years ago. This is a strong purchase market and the uptick in inventory is bringing back some buyers who pulled back during peak frenzy,” noted Odeta Kushi, deputy chief economist with First American Financial.
• The U.S Department of Labor reported an increase of 11,000 initial jobless claims for the week ending September 25th. A caveat to this increase was an accounting error in California, which effectively double counted those shifting from recently ended federal pandemic benefits to other programs, according to the Wall Street Journal. Claims in California rose last week, but, in total fell for the rest of the country on a non-seasonally adjusted basis. The four-week moving average was 340,000 – right around the lowest levels since the beginning of the pandemic.
• Per a recent article from Market Watch, the president of the New York Federal Reserve on Monday, John Williams, predicted a bout of high U.S. inflation will mostly fade away by 2022. Although inflation is currently well above the Fed’s 2% target, Williams said he expects price pressures to ease as the pandemic fades and business returns close to normal. He admitted he did not have a precise timeline for such events, saying “this process of adjustment may take another year or so to complete as the pandemic-related swings in supply and demand gradually recede.” This comes as good news as consumer hope that current inflation is at peak levels and begins to subside moving forward.