Mortgage rates increased by five basis points last week, according to the Freddie Mac Primary Mortgage Market Survey as of September 3rd. Purchase demand remained relatively stable, indicating steady interest from buyers adapting to evolving market conditions.
Mortgage applications increased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 28th. “Mortgage rates reached their highest levels in four weeks as investors’ concerns about inflation and growing deficits push yields higher across the globe,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Refinance volume dropped in response, but purchase volume increased modestly over the week and was slightly below last year’s level. In many local markets, potential buyers have plenty of homes to choose from, and this is likely supporting transaction volume.
U.S. manufacturing activity eased in August amid a slowdown in new orders and some manufacturers worried that higher prices because of the Middle East conflict and tariffs could undercut sales. The survey also noted price pressures driven by an artificial intelligence buildout. It could raise concerns about inflation broadening and further bolster expectations of an interest rate increase this year. “The continued availability to jobs relative to the number of unemployed, the extremely low layoff rate, the growing shortages and price increase in manufacturing, and the continued expansion in manufacturing activity nonetheless take the Fed another small step toward a rate hike on September 16,” said John Ryding, chief economic advisor at Brean Capital.
Federal Reserve Chairman Kevin Warsh expressed concern about elevated inflation while hinting that interest rates could need to move higher if more progress isn’t made on easing price pressures. Warsh’s remarks avoided committing either to forward guidance, verbal cues about the Fed’s intentions, or reaction function; the economic signals that would warrant an adjustment in rates. However, he did acknowledge that inflation is running hot, saying, “while this summer’s inflation readings were better than expected, they do not tell me that underlying trends have meaningfully improved. We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job, our mandate and our charge to keep,” he added.
