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Mortgage rates are plunging with the news of inflation calming. Consumer prices rose by 3.2% in September, even with the rent component still showing a hefty gain of 6.7%. Non-official private sector rent data has shown a 0% to 2% rise, which, if hypothetically used in the official figures, would bring inflation down below the Federal Reserve’s desired inflation target of 2%.
The interest rate rises should be over, and the Fed will have to consider cutting interest rates seriously. In the meantime, the bond market is reacting as if the Fed will be cutting interest rates next year. Mortgage rates look to head towards 7% in a few months and into the 6% range by the spring of 2024.
