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Mortgage rates tick up after June CPI eases inflation concerns
After the June CPI report showed inflation cooling to 3.5% year over year, traders pared expectations for a July Fed hike, helping pull back the probability of rates moving higher.
June inflation cooled, and the shift showed up quickly in interest rate expectations, but average mortgage rates still moved higher for the day, according to HousingWire. U.S. Bureau of Labor Statistics data showed annualized CPI inflation falling to 3.5% in June, down from 4.2% in May, with the monthly decline of 0.4% the largest drop since the start of the COVID-19 pandemic. In response, rate traders dialed back expectations for a Federal Reserve hike later this month, with CME Group's FedWatch indicating 88% odds the benchmark rate would stay unchanged after the July 29 FOMC meeting, up from 58% one day earlier.
At HousingWire's Mortgage Rates Center, 30-year conventional rates averaged 6.86%, up 9 basis points from one week earlier. Rates for 30-year FHA loans rose 10 bps to 6.45%, and 30-year jumbo loans climbed 12 bps to 6.87%.
Looking ahead, odds for September were roughly split between a 25-basis-point increase and no movement. HousingWire also cited mortgage market commentary noting that the 10-year Treasury yield tends to be the rate homeowners should watch, and that Mortgage Bankers Association data showed refinance application demand rose as rates fell into the week ending June 26, then dropped sharply when rates moved higher the following week.