US Mortgage Rates Climb To 7.20% (Highest Since 2000) As Core Inflation And Diesel Prices Soar With The Fed Counterttacking (Mortgage Rates Likely To Rise To 9-9.25% By May 2023)

US 30-year mortgage rates rose to 7.20% yesterday, the highest rate since 2000. Why?

Core inflation is rising and its the highest since 1992. Diesel prices, the all-important fuel for the transportation industry, is rising again after a brief respite and is near the all-time high.

But will mortgage rates continue to rise? That depends on The Federal Reserve. Will they continue to try to combat inflation (largely caused by … The Federal Reserve and voracious Federal spending under Biden/Pelosi/Schumer (The Three Amigos).

As of today, investors in Fed Funds Futures are pointing to a peak of Fed tightening in May 2023, then a slow decline in rates.

While this is The Fed Funds rate, it is likely that mortgage rates will continue to rise to May 2023 then level out at 9%-9.25%.

I really miss teaching college students. An example of a test question I gave was the first chart: who was The President when all hell broke loose (pink box)? 1) Joe Biden, 2) Donald Trump or 3) Millard Fillmore?

The answer, of course, is Joe Biden.

Doesn’t Millard Fillmore, the 13th President of the United States, look like actor Alec Baldwin after too many cheeseburgers and chocolate milkshakes at In-N-Out Burger?

Bear in mind that the are numerous wildcards in play, like the Russia/Ukraine war and the probability the China will invade Taiwan in the near future.

US 1-Unit Housing Starts Plunge -18.5% In September As Liquidity Grinds To A Halt (Multifamily Starts DOWN -13.11%)

Liquidity is a big deal for the housing and mortgage markets.

Unfortunately, M2 Money YoY (liquidity) is shrinking fast and 1-unit (single family detached) starts dropped -18.5% in September.

This is not surprising given the decline yesterday in the NAHB market index.

Even multifamily (5+ unit starts) were down -13.11% in September.

Mortgage Applications Plummet in Latest Weekly Survey, Lowest Level Since 1997 (Refi Apps Down 86% YoY, Purchase Apps Down 38% YoY)

Well, this isn’t good. But it is consistent with the highest inflation rate in 40 years and The Federal Reserves’ counterattack. Basic mortgage applications are now down to their lowest level since 1997 as mortgage rates rise.

Mortgage applications decreased 4.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 14, 2022.

The Refinance Index decreased 7 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 38 percent lower than the same week one year ago.

Bear in mind that these numbers are for the week of October 14, so the home purchase season is in the “house latitudes.” That is, the slow season for home sales. The refinancing applications index has dropped thanks to Fed tightening.

Chain Gang! US Mortgage Rates Rise for Seventh Week to Highest in 16 Years (Basic Mortgage Applications Fall To May 1997 Levels, Refi Apps DOWN 86% YoY, Purchase Apps DOWN 37% YoY)

In addition to creating the highest inflation rate in 40 years, we are now seeing the highest mortgage rate in 16 years. I feel like we are all on a chain gang.

(Bloomberg) — US mortgage rates jumped to a 16-year high of 6.75%, marking the seventh-straight weekly increase and spurring the worst slump in home loan applications since the depths of the pandemic.

In fact, mortgage application just fell to the lowest level since May 1997.

The contract rate on a 30-year fixed mortgage rose nearly a quarter percentage point in the last week of September, according to Mortgage Bankers Association data released Wednesday. The steady string of increases in mortgage rates resulted in a more than 14% slump last week in applications to purchase or refinance a home.

Over the past seven weeks, mortgage rates have soared 1.30 percentage points, the largest surge over a comparable period since 2003 and illustrating the abrupt upswing in borrowing costs as the Federal Reserve intensifies its inflation fight.

The effective 30-year fixed rate, which includes the effects of compounding, topped 7% in the period ended Sept. 30, also the highest since 2006.

The Refinance Index decreased 18 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 13 percent from one week earlier. The unadjusted Purchase Index decreased 13 percent compared with the previous week and was 37 percent lower than the same week one year ago.

Here is today’s table of MBA mortgage applications and its ugly.

Meanwhile, the politicians in Washington DC are twisting the night away while the rest of the nation suffers.

Unfortunately for the US chain gang, gasoline prices are rising again as the US drains its petroleum reserve. Because, that’s the way … uh-huh … they like.

America! US 30yr Mortgage Rates Declines To 6.85% As US Home Prices Retreat From Highs (Will The Fed Pivot To Increase M2 Money Again?)

I was confused when President Biden claimed ‘I was sort of raised in the Puerto Rican community’ in Delaware.” Here are Joe and Jill Biden singing “America.” Apparently, Biden was in the Sharks gang and Trump’s MAGA supporters are the Jets.

On the real estate side, Bankrate’s 30-year mortgage rate dropped to 6.85% as the 10-year US Treasury yield drops.

On the home price front, according to the Black Knight Home Price Index (HPI), median home prices fell 0.98% in August, only marginally better than July’s upwardly revised 1.05% monthly decline July. August 2022 marked the largest single-month price declines seen since January 2009 and rank among the eight largest on record. The monthly rate of home price decline is now rivaling that seen during the Great Recession – the question is how long it will continue to do so, and how far off peaks prices will fall.

Now, will The Fed pivot to correct the plunging M2 Money growth?

Here is Joe Biden’s memory of a Maga rumble from Wilmington Delaware. I assume Trump is Riff and Biden is Bernado. But where is Corn Pop??

Living In An Inverted (Bond) World! 19 Nations Have Negative 10yr-2yr Yield Curves (As US Housing Inventory For Sale In SOARING Out West)

We are living in an inverted (bond) world!

19 nations now have inverted 10yr-2yr yield curves.

And housing inventory for sale growth is soaring out West and in Tennessee?

At least Ohio is seeing a modest increase in housing inventory for sale.

On a parting note (before I watch the Ohio State Buckeyes annihilate the Rutgers Scarlet Knights tomorrow at 3pm EST, reverse repos parked overnight at The Fed just hit an all-time high. Apparently, banks don’t believe Janet Yellen’s inflation is transitory mumbo-jumbo.

US Pending Home Sales PLUNGE -22.5% YoY In August As Fed Continues Panzer-like Assault Against Inflation And Consumers

The scalding inflation rate crippling middle class Americans and low-wage workers is causing The Federal Reserve to take action by finally tightening their monetary policy.

As such we are seeing a rapid decline in the US housing market in terms of sales. For August, pending home sales declined -22.5% YoY as expectations of further Fed rate hikes (blue line) soars. Note that impact of The Fed’s and Federal government “sugar rush” after the Covid outbreak in early 2020 and its impact on pending home sales.

Without the “sugar rush,” pending home sales are dying.

Speaking of a sugar crash, risk parity ETF is down 32% from high.

The culprit? The Federal Reserve’s Panzer onslaught! With its leader, ~~Heinz Wilhelm Guderian~~ Jerome Powell.

The Dow is up 500 points today on the expectation that The Fed will stop tightening in the face of global chaos.

As UK 10yr yields fall -50 BPS!! And US T-10 yield drop -20.8 basis points.

Here is a photo of The Federal Reserve attacking American consumers to reduce inflation caused by Biden’s green energy policies and insane spending by Biden/Pelosi/Schumer.

Will Janet Yellen and Jerome Powell be awarded Panzer assault medals for 1) leaving monetary stimulus too large for too long then 2) suddenly tightening stimulus?

US Existing Home Sales Plunge -19.87% In August As Fed Tightens Monetary Noose (US Existing Home Sales Sink For 7th Straight Month)

Well, The Federal Reserve is doing what they wanted … crushing the housing market as they fight inflation.

Today we get our first glimpse of the carnage in the housing market from August. With mortgage rates having soared and homebuilder sentiment tumbling (and permits plunging), it should be no surprise that existing home sales were expected to fall for the 7th straight month (-2.3% MoM vs -5.9% MoM in July).

Somewhat surprisingly, existing home sales ‘only’ fell 0.4% MoM in August (from a revised 5.7% MoM drop in July), but that is still 7 consecutive drops. This left existing home sales down 19.87% YoY.

Look at existing home sales YoY as M2 Money Yoy crashes.

Median prices YoY for existing home sales plunged to 7.63% while inventory for sale (yellow line) remains depressed.

Fed Garbage? MBA Applications Rise As Households Panic About The Fed Raising Rates (Refi Applications Still 83% Lower YoY, Purchase Applications 30% Lower YoY)

As people are painfully aware, The Federal Reserve is on a mission … to hike interest rates to tame inflation back to 2%.

So, we saw a small surge in mortgage applications last week as the expectations of Fed rate hikes sinks in and households try to lock in mortgage rates.

Mortgage applications increased 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 16, 2022. Last week’s results include an adjustment for the Labor Day holiday.

The Refinance Index increased 10 percent from the previous week and was 83 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 11 percent compared with the previous week and was 30 percent lower than the same week one year ago.

At least the percentage of ARMs remained the same, 9.1%.

The Federal Reserve has a line on you! Or noose.

By the way, the theme song for the US version of the TV show “The Office” was written by Jay Ferguson, the primary singer for the ’60s band Spirit (that performed “I’ve Got A Line On You!”).

Here is Jay Ferguson singing the Spirit song “Fresh Garbage.” A fitting song for The Federal Reserve. Fed Garbage??

Today will be another Fed rate hike, expected to be a whopping 75 basis points. The S&P 500 tends to rally (green line) after the FOMC announcement. What will happen today?

The Core! US 30y Mortgage Rate Rises (US Futures Fall as Traders Eye Supersized Fed Hike)

Even Obama’s economic advisor, Larry Summers, is wondering why Biden won’t allow pipelines to be build to reduce energy prices and reduce inflation.

Having said that, US mortgage rates are now the highest since 2008 and continue to rise with the expectation of more Fed rate hikes this year. Even core inflation is on the rise motivating The Fed to do more tightening since they aren’t receiving any help from Biden on energy or Congress in terms of massive spending of our money.

Mortgage payments for a median existing home in the US is back to the mid-1980s.

Data from Fed Funds futures implies that The Fed will raise their target rate to 4.50% by March 2023, then slowly lower rates.

Futures are down with the prospect of a 75 basis point bump in rates tomorrow. The Dow Jone Mini is down -167 points.