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Mortgage Rates Shoot Higher on Inflation Report

·1 min read

Mortgage rates moved sharply higher late last week.

Rates were gradually increasing throughout the week, then shot higher on Friday with the Consumer Price Index release. The CPI report showed increasing inflation in May, rising from 8.3% in April to 8.6%, higher than market expectations. Markets reacted to this persistent inflation with a large selloff in both fixed income and equity markets as fears of more hawkish central bank actions and recessionary pressures drove risk-off sentiment. Following the CPI report, The University of Michigan consumer sentiment index reached a record low, as consumers are less confident in economic conditions even with very low unemployment. Markets are beginning to show more concern that the Fed must take more aggressive actions to tame inflation, which would increase the likelihood of a recession as the economy slows down. Interest rates have continued to climb this week in front of the FOMC meeting today with markets expecting a 75 basis point rate increase.

The Federal Reserve met those expectations, raising the Federal Funds target rate by 75 basis points today, the largest increase since 1994.

The post Mortgage Rates Shoot Higher on Inflation Report appeared first on Zillow Research.