Mortgage Rate Update - February 27, 2023
Updated: Mar 12
An uptick in the Fed's Favorite Inflation Indicator
The Fed’s favorite inflation indicator came in higher than expected last week. Personal Consumption Expenditures (PCE) rose 5.4% from the previous year, up 0.6% from December. Things continue to get more expensive. That means rates jumped on Friday, and the equity markets took a step backward.
Consumers are spending money. Used car prices are up, unemployment is nearly nonexistent, and wage growth is steady. Higher rates represent an affordability challenge but not a killer in this market.
Last week's news comes with a potential silver lining. With inflation hanging around, the Fed will be forced to act definitively in the coming months. If they move from 0.25% up to 0.5% increases, the market may see that as a sign that the Fed is serious about cooling the economy off, and rates could relax.
The most important thing is to ensure you and your buyers are ready to move when the market does.