According to Realtor.com Research, mortgage rates have remained essentially flat this week, inching up just slightly to around 6.66% for the 30-year fixed loan. Over the past month, rates have stayed lodged in the mid-6% range as Treasury yields have remained stubbornly high, bouncing around between different levels as markets react to geopolitical concerns and economic data.
The inflation picture stayed mixed this week when the latest Personal Consumption Expenditures report came in slightly warmer than expected. Inflation held steady at a higher level than economists had hoped, which essentially kept Treasury yields and mortgage rates from moving dramatically in either direction. The data wasn't concerning enough to trigger major hawkish market reactions, but it also wasn't cool enough to build momentum for the Fed to cut rates soon.
Attention now shifts to Fed Chair Kevin Warsh's address at the Jackson Hole conference, where he'll address ongoing inflation concerns and the impact of geopolitical tensions on energy markets. Markets are bracing for a neutral message, but since that outcome is already built into current prices, any surprise announcement could shift Treasury yields and send mortgage rates moving.
Looking at the bigger picture, rates have climbed throughout this year largely because geopolitical instability has kept oil prices elevated, which in turn has kept inflation expectations and mortgage rates higher than buyers would prefer. On the positive side for those looking to purchase, home prices have actually fallen year over year for nine consecutive months, and inventory is growing while homes are staying on the market longer. This combination means buyers have more negotiating power even though financing costs haven't improved.
What I am seeing locally here in the Bay Area and East Bay is that while our regional market has its own dynamics, this national trend toward price softening and better buyer leverage is definitely relevant to our communities. Even though rates remain sticky in the mid-6% range, the fact that sellers are becoming more flexible and inventory is building gives our clients more options than they've had in quite some time.
