Mortgage Rates Eerily Stable

After a nice 1/2% drop in mortgage rates a week and an half ago, there hasn’t been much change.

It seems that mortgage bond traders are looking for more data to support the theory that inflation has peaked and is not trending lower. It could be mid December, after the next Fed announcement and Consumer Price Index report, before we see any significant changes to mortgage rates. If we see inflation concerns continue to cool, we can expect to see mortgage rates further improve.

Consumer Spending is showing resilience. However, this also aligns with a rise in credit card debt and a drop in Consumer Savings. Many believe consumers are spending as they did when the US Treasury was providing Covid stimulus payments; but are now using credit card debt to finance their purchases.

We can expect this trend to continue, at least through the holiday shopping season. Then we should see consumers begin to tighten their belts as they are faced with the task of getting their budget back in line. With the average interest rates on credit card debt now about 3% higher than it was in 2021, it will be harder for consumers to pay back what they owe.

The yield on the 10-Year Treasury Note continues to find support from its 50-day moving average. In the meantime, floating an interest rate remains risky. Float if you are able to closely monitor the markets.