Washington, DC (CNN) � US mortgage rates ticked up this week, ending a two-week streak of slight declines. Rates have remained over 7% for five consecutive weeks as
The 30-year fixed-rate mortgage averaged 7.18% in the week ending September 14, up from according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 6.02%.
“The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated,� said Sam Khater, Freddie Mac’s chief economist.
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
All eyes on the Federal Reserve
The rate for a 30-year mortgage has held steady for the past month as investors wait for the Federal Reserve’s rate decision next week. The Fed has been vigorously fighting inflation , and this week’s inflation data is seen as a key factor as the central bank determines its next move.
“While August’s headline inflation was driven up by energy prices, the core [Consumer Price Index], which excludes volatile food and energy items, and which the Fed watches more closely, provides more evidence that core inflation is trending down toward pre-pandemic levels,” said Jiayi Xu, an economist at .
However, the elevated level of inflation and the slow deceleration rate suggest it will take time to get inflation back down to the Fed’s 2% target. The Fed’s favored inflation gauge, the Personal Consumption Expenditures index, on an annual basis.
The central bank also closely watches CPI, which rose 3.7% in August from a year earlier. This inflation measure is expected to decline in coming months as the costs of housing, known as “shelter� in the data, fall. But there is a lag in the data, so it may still take time to be reflected in the inflation rate.
“Shelter costs, the most important component of the core CPI, have moved down for five consecutive months on a year-over-year basis,� said Xu, adding that private data, like that from her company, shows that
Meanwhile, prices of homes for sale have ticked up.
“While the CPI shelter index has trended favorably, pulling down core inflation � the recent price rebound within the for-sale housing markets may add some uncertainties,� she said.
The-CNN-Wire
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