Why Mortgage Rates Jumped Last Week

If you were watching mortgage rates last week, you probably noticed they moved in the wrong direction, and pretty quickly.

After a stretch of relatively stable rates, the market took a hit from a combination of stronger economic data and higher inflation.

The jobs report came in much stronger than expected, showing that the economy and labor market are still holding up well. Normally that's good news, but strong economic data can actually be bad for mortgage rates because it gives the Federal Reserve less reason to lower interest rates.

Then we got the latest inflation report.

Consumer prices rose 0.4% in August, with inflation running at 3.4% over the past year. Energy prices were a big part of the increase, with gasoline prices jumping during the month.

Put those together and investors became increasingly concerned that the Fed may need to keep rates higher, or even raise them again.

Mortgage rates responded. Freddie Mac's national average 30-year fixed rate increased to 6.76%, up from 6.71% the previous week and 6.66% the week before that.

And remember, that's a weekly average. Actual mortgage pricing can move much faster than the Freddie Mac survey shows.

So what happens next?

This week we have another Federal Reserve meeting, and markets will be watching closely for clues about where rates go from here.

For buyers, my advice hasn't really changed: don't try to perfectly time mortgage rates.

If you find the right home and the payment works today, make the decision based on today's numbers. If rates improve down the road, we can always look at refinancing.

But right now, I definitely wouldn't build a home purchase around the assumption that lower rates are right around the corner.

As always, if you're thinking about buying and want to see what the numbers actually look like, I'm happy to run some scenarios with you.