September's inflation report landed hotter than forecast this morning. The Bureau of Labor Statistics says headline prices rose 0.6% on the month and 3.7% from a year ago, up from 3.4% in August, with energy up 20.4% over the year and gasoline up 34.2%. Core prices, which strip out food and energy, rose 0.3% on the month and 2.6% over the year, and shelter added another 0.4%. Mortgage News Daily puts the unrounded core reading at 0.335%, close to rounding up to 0.4%, against a 0.2% expectation. Redfin now puts the odds of a rate hike at the Fed meeting that wraps up October 28 at "50/50."
The timing cuts into last week's rally. The Bankrate 30-year fixed eased to 7.47% from 7.57% on October 12 after Fed speeches pulled back hike expectations, per Mortgage News Daily, which reads today's print as putting "a floor under" that rally rather than reversing it. Redfin expects rates to "give back some of last week's improvements." The 10-year Treasury sits at 5.24%, up from 5.21% yesterday. Zoom out and the trend is still higher: Bankrate's 30-year was 6.90% a month ago, and 7.47% sits near the top of its 90-day range of 6.61% to 7.57%. Freddie Mac's weekly PMMS read 7.40% on October 8, up 0.64 points over 30 days.
That rate path is showing up in demand while supply keeps building. Fannie Mae's Purchase Application-Level Index, built from Desktop Underwriter data, fell 3.9% week over week and 16.7% year over year for the week ending October 9, and rate-term refinance dollar volume ran 77.3% below a year ago. HousingWire reports MBA's weekly survey slipped 2.7%, with the refinance share at 37.7%. On the other side of the table, existing-home sales ran at a 3.99 million annual pace in September, up from 3.93 million in August, and Redfin counts 62.6% more sellers than buyers, the widest gap in its records back to 2013. Redfin puts buyers at a record low of about 929,000 and counts 41 of the 50 most populous metros as buyer's markets, led by Miami, Nashville and Houston.
For pipelines, the next two weeks hinge on two dates. Core PCE is due in the October 23 to 30 window, and the FOMC meets October 27 to 28, a meeting with no dot plot. Redfin calls core PCE the swing factor: if it rounds to 0.4%, Redfin says the Fed "may find it difficult not to hike." Before that, housing starts and permits are due October 16 to 18 and jobless claims land tomorrow. Redfin's seller-heavy count is the case for asking listing agents about seller concessions toward a rate buydown on purchase files.
On the regulatory side, the CFPB said it will investigate whether the nine large national banks named in the OCC's debanking report, and others, complied with the Equal Credit Opportunity Act, the Fair Credit Reporting Act's adverse-action notice rules and UDAAP prohibitions; it set no deadlines, and the announcement does not address mortgage lending. Bank of America separately drew a $750 million OCC penalty, which the OCC calls the largest in its history, and a $1.2 billion FinCEN penalty for Bank Secrecy Act and anti-money-laundering failures. Fannie Mae reminds lenders the Uniform Property Data Report is now required by Fannie Mae and Freddie Mac, and says its November and December Desktop Underwriter releases will clarify occupancy-risk and income messages. The UAD 3.6 and new URAR mandate follows on November 2.
pull every floating loan set to close after October 28 and call each borrower with a lock-or-float conversation before core PCE lands, showing the payment at today's rate next to the payment a quarter point higher.