Did new inflation data impact the mortgage market?

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Inflation metrics come in lower than expected

New inflation metrics were released on Thursday, and they showed that the core personal consumption expenditures price index rose 0.2% in October. The small increase was slightly below the predicted result. The index has increased 5% year-over-year.

Personal income was up 0.7% for the month. That was almost double the 0.4% prediction. Spending was up 0.8%, inline with monthly predictions.

The report was viewed positively by most markets as it indicated that price increases might be stabilizing.

How did the mortgage market react to inflation data?

The national average for a 30-year, fixed rate mortgage ended the day at 6.29%.* The day over day drop has resulted in the national average for a 30-year, fixed-rate mortgage hitting the lowest level since mid-September.

December 1st was the best day for mortgage rate improvement since November 10th, and one of the best days of the year so far. Reasons cited for the sudden change were a positive response to Chairman Powell’s speech and stronger than expected bond buying as part of the month-end trading process.

Are renters finally catching a break?

After 18 months of watching rent rise, demand from renters is finally cooling off and landlords have been forced to tone down their pricing. Last year, average rents rose by 2.7% nationwide. However, in the past 3 months, the average cost to rent a home has dropped by 2.2%. This could indicate the start of a trend that could see growth in rent stop or reverse course in 2023. This has also come with an increase in vacancy rates from 4.1% to 5.7% over the past year.

* National average rates are provided for illustrative purposes and are not advertised rates from Guaranteed Rate.

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