Mortgage Market Update

Mortgage rates climbed higher again last week with more experts urging quick action by the Fed. The market is fully pricing in a half-point increase in rates at the Fed’s May meeting. Only a few months ago, the idea of a half-point move seemed radical, but with so many factors converging to press prices higher, a half-point move is now the minimum. In many ways, the economy is slamming into a perfect storm for inflationary pressures to grow. A sizeable domestic bounce-back in demand, added economic stimulus, extremely tight labor and housing markets, a war in Europe, COVID lockdowns in China, and other factors are all at play. Some analysts are now wondering if we need to slam the brakes hard enough to create a mild recession to get prices under control. This week brings the first estimate for Q1’s GDP. Consensus estimates range from 0.2% to 1.9%. The lower the actual reading, the slower rates will climb. Friday’s critical release of PCE Prices could also slow the climb if it comes in under expectations. Of course, if it comes in high, rates will rise. - Shea Oliver, MyProNewsletter