Source: Money —
Hope for relief from rapidly rising mortgage rates was revived this week when October inflation numbers came in lower than expected.
Consumer prices continued to increase last month but at a slower pace than at any other point this year. The latest report from the Bureau of Labor Statistics indicates that year-over-year inflation fell to 7.7% in October, half a percentage point lower than the September reading of 8.2%.
The lower reading means that the Federal Reserve may finally ease up on its aggressive campaign to tame inflation, says Lisa Sturtevant, chief economist at Bright MLS, a home listing platform that serves the Mid-Atlantic region.
“I think they’re starting to see interest rate hikes have the intended effect,” says Sturtevant, allowing the Fed to “back off those regular increases to the federal funds rate.”
As a result, she expects mortgage rates could soon stabilize. Mortgage rates, as measured by Freddie Mac, have increased on an almost weekly basis since the beginning of the year and are currently above 7% — nearly 4 percentage points higher than they were during the first week of January. Half that increase has been just since August, a period when rates have been particularly volatile. (The news had an immediate effect on daily mortgage rate measurements, with Money’s average 30-year rate tumbling by more than half a percentage point between Wednesday and Thursday.)