Portland Mortgage Market Update — September 13, 2024

It was inflation week with the CPI and PPI dropping Wednesday and Thursday. These reports were once very scrutinized when inflation was ramping up, but are now seen as more of a precursor to the Feds preferred inflation measure, the PCE. The CPI and PPI came in more or less as expected, but the stock market (and to a lesser extent, rates) took a beating on Wednesday as a result.

Did the debate impact the rates? I have heard from many potential buyers recently that have concerns about the election results and its impact on the future of the housing market and mortgage rates. And my response is always this: Political parties in power do not have any impact on mortgage rates. Historically speaking, there is no precedent for rates to move upward or downward during an election year. Rate movements are market dependent and the market is guided more by Fed decisions than it is by presidential policy. And the Fed, despite being a federal agency, is tasked with operating independently of the presidency and federal government. Here <https://www.youtube.com/watch?v=YJteTm0w8nA> is a video that is a great deep dive on mortgage rates during election years

Next week the Fed meets which means our first rate cut should be announced sometime around 11:00 PST on Wednesday. After this week's inflation reports, the market is betting an even split on a 25 vs 50 basis point cut. Unfortunately the aforementioned PCE report doesn't come out until the 27th, so the Fed won't that most recent data on hand to help make their determination. There is growing concern among the markets that the Fed will do too little, too late and be behind the curve for their coveted "soft landing". Regardless how much they cut the rate next week, the market is estimating a 90% chance they drop them by at least a full percentage by the end of 2024.