Folks, three weeks of good news ended in about two days. Inflation came in hot on Tuesday, bonds sold off hard, and by Friday the 30-year fixed was back at 7.5%. The rally we spent October building is gone. Here is the short version, what it means for your payment, and the two days next week that matter.
The numbers
30-year fixed: 7.50% Friday, up from 7.18% last Friday. That is the biggest weekly jump in a while.
15-year fixed: 7.03%, up from 6.83%.
10-year Treasury: 5.14%, up from 4.86%. It broke back above 5% on Tuesday and stayed there.
So what happened Tuesday
October inflation, the CPI report, came in hotter than expected. Prices rose 0.4% for the month against 0.3% expected, and core prices rose 0.3% against 0.2% expected. That is the third upside surprise in a row. One odd note: there was no year-over-year number this time, because the government shutdown last fall left a hole in the data. It comes back with the November report.
The market reaction was fast and ugly. The 10-year jumped about 10 basis points in a day and topped 5%. The average 30-year fixed rose 0.12% in one day to 7.30%, the biggest one-day jump in over a month.
Then Fed Governor Waller turned up the heat. He had said before the report that a 0.3% core reading would make him consider a half-point hike in December. It printed 0.3%. Now traders treat a December hike as a lock, with most of the money on a quarter point and about a 1 in 8 chance of a half point.
Thursday made it worse. Bonds sold off for a second straight day, the 10-year broke above 5.13%, and the 30-year hit 7.42%. October home sales fell 5.5% to a 3.75 million pace, the slowest since 2010, as higher rates bit. Friday brought wholesale inflation, the PPI report, right in line with expectations, and the selling leveled off. No new damage, but no bounce either.
Some context. The Fed held its rate at 3.75% to 4.00% on October 28, with two voters wanting a hike. Then October jobs came in hot, 165,000 against 65,000 expected. Tuesday was the third strike. The next Fed meeting is December 8 and 9, and that date is circled on every trader's calendar.
What this means for you
If you are buying: at 7.50%, a $400,000 loan runs about $2,797 a month in principal and interest. That is $87 more than last Friday. In one week. Get a fresh quote before you make an offer. Anything more than a couple of days old is history in this market.
Lock or float: both of my dashboards ended the week in wait and see mode, and one of them flashed a lock alert on Thursday. Here is my honest take. The friendly trend is over, and floating now means betting that inflation cools off on its own. If you are under contract and you like your number, lock it and sleep good. If you enjoy a gamble, float, but know it is a gamble.
Realtors, tell your buyers this: stop waiting on a magic number. Rates fell for three weeks because stock investors got nervous, and they jumped back in two days because inflation ran hot. You cannot time that, and neither can I. Buy the house you can afford today, work the seller while demand is soft, and if rates come back down, we refinance later. That has always been the play. And sellers are listening. Home sales just hit their slowest pace since 2010. Credits, buydowns, repairs: ask. The worst they can say is no.
Next week: Tuesday and Wednesday run the show
Tuesday brings October retail sales at 7:30 in the morning. Strong spending backs the case for a December hike, so a hot number pushes rates up and a soft number gives bonds some air. Home builder confidence comes out the same morning.
Wednesday is the big one. The Fed releases the minutes from its October meeting at 1:00 in the afternoon. That tells us what they were actually arguing about when they held rates, and how close the hike voters were to winning. Housing starts and pending home sales land that morning too.
Friday brings consumer sentiment. Worth a glance, nothing more.
Washington had a busy week too
The industry folks at NAMB sent their Hill update Friday morning, and a few items in it land right on your kitchen table.
On Veterans Day the House passed a bill that would nearly triple the fee on a VA refinance, from 0.5% to 1.42%, and make it permanent. It is not law. The Senate has it now, fees stay at 0.5% until that changes, and NAMB says it is still checking the final text. If you are a vet thinking about a refinance, this is one to watch, not panic over.
The Senate itself is getting tighter. Democrats picked up Mississippi, and by mid December the Republican majority could shrink to 52 to 48. Government funding runs out December 11, and any bill not passed by January 3 starts over.
Two dates for your calendar. Condo associations must hold 15% of their annual budget in reserves starting January 4, up from 10%, and NAMB says no delay is coming. And starting January 7, big investors get barred from buying more single family homes. One more from NAMB: the average credit report on a conventional loan now runs about $540, up from about $50 in 2022. That lands in your closing costs, folks.
Bottom line
Three weeks of gains, gone in two days, all because inflation would not cool off. Tuesday and Wednesday decide whether this settles here or gets worse. If you are under contract, do not get cute. Take a good number while it is on the table.
Dio Vannucci is a mortgage loan officer helping first-time buyers and Realtors make sense of the market. This recap is for education, not financial advice. Talk to your lender about your specific situation.
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