Portland Mortgage Market Update — April 12, 2024

The CPI report dropped this week (like a lead balloon). Yes the all-important inflation report was released on Wednesday and was expected to come in at 3.4%. Instead it came in a smidge hotter at 3.5% and rates shot up as a result. The report takes in various expenses and measures them to determine how costs of goods and services have risen or lowered over the past year. The two line items in this most recent report that did the most damage to that number were the categories "shelter" and "motor vehicle insurance". Shelter I can see as the figure they use includes rental contracts that could have been set in place over a year ago when rents were at their peak. But Motor Vehicle Insurance was definitely not expected. Rates are currently improving a bit from yesterday and are sitting around 7.25%

So what is it going to take for rates to drop? With this month's CPI report coming in higher than expected, and the next few CPI reports expected to be pretty comparable to this one, it doesn't look like inflation is going to hit that 2% target anytime soon. So what will it take for rates to come down?

• Unemployment is probably the biggest potential influencer of rates right now. The Fed has been consistent in leaning on the strong jobs reports as proof that the economy is still hot, even if anecdotally we all can feel that it isn't as strong as the reports are indicating. If we get a jobs report that shows unemployment over 4% the fed will likely be pressured to start cutting their rate • The Fed Balance Sheet is another potential market mover. This week the notes from last months Fed meeting were released and they indicated most members were in favor of slowing their runoff fairly soon. "Runoff" is the act of the Fed allowing securities it has purchased to mature and fall off their balance sheet. By doing so it sounds like the Fed is interested in slowing their Quantitative Tightening policy and moving back towards a Quantitative Easing which would bode well for interest rates

TOOTING MY OWN HORN ALERT! I just wanted to let you know that we closed a loan today less than 3 weeks ago, and it included a full appraisal. If we did not need an appraisal this would have been closed last week. If you have any clients that need a quick close or need to switch lenders, keep me in mind!

That's all for this week. I am around all weekend so feel free to reach out with any questions!