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Mortgage rates expected to fall after softer CPI inflation reading

The CPI print showed headline inflation down 0.4% month over month in June, reducing the odds of a July Fed rate hike.

Reported · Written up by our desk · Mortgages

Mortgage rates are expected to move lower after a cooler-than-expected CPI inflation reading, a shift that reduces expectations for a July rate hike. Redfin News said the softer data gave the Federal Reserve less reason to raise rates at its July 29 meeting, setting up a decline in borrowing costs.

According to Redfin News, headline inflation came in at -0.4% month over month and 3.5% year over year in June, helped by energy price declines. The article also cited steady growth in inflation after excluding food and energy, suggesting inflation pressures were not accelerating.

Redfin News also pointed to additional market signals that could support easing mortgage rates, including a jump in jobless claims. It characterized the overall setup as supportive of more rate cuts, with a September rate cut on the table and a July rate hike increasingly difficult to justify after the latest inflation news.

The piece ties the macro data directly to housing finance, noting that mortgage rates are expected to fall further on the day of the report. It frames the change as a reaction to reduced odds of Fed tightening following the unexpectedly soft inflation results.

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