Mortgage News Weekly

Welcome to GTG Weekly!

We are excited to share with you the latest updates and insights from the mortgage market.

• Mortgage Rates: We saw a nice dip early last week with the CPI (Consumer Price Index) for November being released. The market quickly gave up those gains after the anticipated Fed announcement on 12/14 and even back tracked for some products. You’ll see the technical breakdown below, overall there was a nice window to hit some low rates early in the week, but it closed quickly.
•  Fed’s latest rate hike:
  • The Federal Reserve (Fed) increased its benchmark Fed Funds Rate by 50 basis points
  • This was the seventh rate hike of the year, though at a slower pace than previous hikes
  • The Prime rate is now 7.50%
  • The Fed Funds Rate is the interest rate for overnight borrowing for banks, and is not the same as mortgage rates
  • The Fed hikes the Fed Funds Rate to slow the economy and curb inflation
  • Most members of the Fed forecasted a Fed Funds Rate of over 5%
  • The projected terminal rate (highest the Fed Funds Rate will go in the cycle) increased to 5.1% from 4.6%
  • Fed Chair Jerome Powell acknowledged that recent inflation data shows a “welcome reduction in the monthly pace of price increases”
•  Consumer inflation:
  • The Consumer Price Index (CPI) showed a 0.1% increase in November, lower than expected
  • On an annual basis, inflation decreased from 7.7% to 7.1%, lower than the 7.3% expected
  • Core CPI, which excludes volatile food and energy prices, also came in lower than expected with a 0.2% increase
•  Small business owners:
  • Continue to report that inflation is their top problem
•  Jobless claims:
  • Continuing jobless claims remain at their highest level since February

November Inflation Stats:

Finally headed in the right direction?

The major focus that helped rates this past week was that overall and core inflation metrics came in UNDER expected amounts.

•  Overall inflation increased by 0.1% but was 0.2% below expectations.  Year over year, inflation declined from 7.7% to 7.1%, which was lower than expected.
•  The Core rate increased by 0.2%, which was softer than anticipated.  As a result, year over year core inflation decreased from 6.3% to 6.0%, also lower than expected.
•  Shelter costs, which make up 39% of Core CPI, rose 0.6% in November
•  Rent prices have been moderating, with a 4.7% increase from January to November 2021, compared to an 18% increase the previous year
•  Energy prices fell 1.6% from a month ago, bringing the annual gain to 13.1%.
•  Food prices climbed 0.5% in November, bringing the year-over-year gain to 10.6%.
•  Medical care costs fell 0.5% last month and are up 4.2% year over year.

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