Inflation is moving in the right direction

🎉 TGIF. Today’s newsletter is 750 words, a 3-minute read.

1. Inflation is moving in the right direction

The latest Consumer Price Index (CPI) report shows a promising trend, with core inflation currently at 4.1%—a significant dip from last year's 6.3%. This progression validates the Federal Reserve's strategic rate hikes designed to outpace the inflation growth rate.

Though bond market enthusiasts aren't celebrating, Federal Reserve members likely view the direction as vindication of their monetary approach.

The downward trend in core inflation might prompt the Fed to reassess its hawkish stance. It's an opportune moment for the Federal Reserve to consider a respite from discussing further rate hikes, focusing instead on the broader economic picture. LINK

2. White House, CFPB are coming for ‘junk fees’

The Consumer Financial Protection Bureau announced new efforts Wednesday to clamp down on “junk fees,” or unnecessary or excessive charges by banks and financial institutions, footed by American consumers.

The CFPB issued an advisory opinion regarding a 2010 law prohibiting banks and credit unions with $10 billion or more in assets from imposing junk fees on customers seeking account information, such as the balance in a deposit account or the interest rate on a loan.

As lenders lean deeper into automation, the advisory “clarifies that people are entitled to get the basic information they need without having to pay junk fees.” LINK

3. More nuggets

✉️ CHLA, ICAB, and NAR have called on the Biden administration to reduce the historically large spread between the 30-year mortgage rates and 10-year Treasuries. (ICAB)

🔐 Mortgage-rate-lock volume fell 20% in September, led by a combination of seasonal decline in purchase activity and rising interest rates. (NMP)

🧑‍💻 CoreLogic launches an all-in-one platform for loan origination. (CoreLogic)

📌 UWM and Guaranteed Rate say they'll price mortgages of up to $750K as if they're eligible for purchase by Fannie Mae and Freddie Mac in anticipation of 2024 increases.

4. Mortgage applications rise 0.6% amid ARM surge

Mortgage applications picked up 0.6% for the week ending Oct. 6, compared to the week prior, according to weekly mortgage application data from the MBA.

The uptick was mainly due to an increase in ARM volumes. While purchase applications were 20% lower than last year, ARM applications grew 15%, reaching their highest share since November 2022 at 9.2%. Refinance applications inched up 0.3% but are still down 9% year-over-year.

The share of Federal Housing Administration (FHA) loan activity inched down to 14.4% from 14.5%. The share of Department of Veterans Affairs (VA) loan activity was 10.2%, up from 10.1% the week prior while the share of Department of Agriculture (USDA) loan activity held steady at 0.5%. LINK

5. Mortgage rates rise for a fifth week, topping 7.5%

Mortgage rates in the US rose for the fifth week in a row, topping 7.5% for the first time in more than two decades. The average for a 30-year, fixed loan was 7.57%, up from 7.49% last week, Freddie Mac said in a statement Thursday.

Mortgage rates hovering above 7% are pushing potential buyers out of the market, and those who can withstand the costs are battling over a shortage of properties for sale. A measure of house tours and other signs of early demand by Redfin Corp. fell to its lowest level in nearly a year for the four weeks through Oct. 8.

“The housing market remains fraught with significant affordability constraints,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “As a result, purchase demand remains at a three-decade low.” LINK

6. CFPB, DOJ warn lenders against denying credit to immigrants

The CFPB and the DOJ have warned financial institutions that discriminating against credit applicants based on their immigration status could violate the Equal Credit Opportunity Act.

The joint statement released on Thursday reminds banks and other lenders that credit applicants cannot be rejected for loans or credit cards even if they are illegal immigrants.

"Creditors should be aware that unnecessary or overbroad reliance on immigration status in the credit decisioning process, including when that reliance is based on bias, may run afoul of ECOA's anti-discrimination provisions and could also violate other laws," the agencies said in the joint statement.

☀️ See you on Monday!

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