The outlook for interest rates remains uncertain after Federal Reserve Governor Christopher Waller signaled that he would prefer to keep short-term rates steady—unless inflation comes in hotter than expected.
Speaking Sept. 3, Waller said recent data show signs of disinflation and that he would support holding rates at their current level if that progress continues. However, he left the door open to a rate increase if upcoming inflation data show a reversal.
Markets responded positively. The probability of a Fed rate hike fell to about 50.4%, down from 63.2% the previous day. Stocks rallied and 10-year Treasury yields declined, potentially setting the stage for some relief in mortgage rates.
For now, though, borrowers are still facing higher costs. Freddie Mac reported that the average 30-year mortgage rate climbed to 6.71% this week, up from 6.66% the week before. Rising oil prices and renewed inflation concerns are adding pressure.
There is a brighter spot for home shoppers: inventory is improving. New listings reached their highest level in four years during the week ending Aug. 30, while active listings also increased. Mortgage purchase applications rose 2% despite higher rates.
For committed buyers, the combination of more available homes and the possibility of easing mortgage rates could create opportunities—though the next round of inflation data will be critical..
