Hot September inflation may nudge mortgage rates ahead of Fed meeting
September consumer prices rose 0.6% for the month and 3.7% over the year, coming in above economists' expectations. Core inflation, which excludes food and energy, increased 0.3% monthly and 2.6% annually. Treasury yields moved higher after the report, which could influence mortgage pricing before the Federal Reserve's October 28 meeting, though any change to a borrower's quote depends on the lender and whether the rate is locked.
September CPI rose 0.6% monthly and 3.7% yearly, exceeding forecasts. Core prices, excluding food and energy, increased 0.3% monthly and 2.6% annually, above expectations and up from 2.4%.
Gasoline jumped 9.1% and drove over half the headline gain. Shelter rose 0.4%, with owners' equivalent rent up 0.3%. After release, 10-year Treasury yield rose to about 5.3%, up 7-9 basis points; 2-year climbed 10-13 basis points to about 4.9%. Mortgage rates often follow 10-year yields but not exactly.
Higher inflation readings could keep mortgage pricing elevated in the near term, potentially affecting homebuyers and homeowners considering refinancing. Borrowers without a rate lock may see quotes shift quickly, while those already locked may be insulated if they close on time and meet conditions. Refinance benefits may remain limited for many whose current rates are lower than available offers. These effects may vary by lender, loan profile, and timing.