Inflation rose by a bigger-than-expected 3.1%

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1. Inflation rose by a bigger-than-expected 3.1%

Inflation eased again in January but came in above Wall Street’s expectations, clouding the Federal Reserve’s path to rate cuts and potentially giving the central bank breathing space to wait until the middle of the year.

The Labor Department reported Tuesday that consumer prices rose 3.1% in January from a year earlier, versus a December gain of 3.4%. That marked the lowest reading since June.

Still, the consumer-price index was higher than the predicted 2.9%, a disappointment for investors who hope the Fed will cut rates sooner rather than later.

2. Inflation shift spurs bond market reaction

Despite expectations for inflation to remain stable, yesterday's report contradicted the trend of cooling momentum observed since last September, indicating a return to the higher levels of early 2023.

The bond market (which underlies mortgage rates) reacted immediately and forcefully when the numbers came out. Bonds continued to worsen as the day went on, leading many mortgage lenders to raise rates once or twice during the day.

The net effect was an average 30-year fixed rate moved well into the 7s after being in the high 6s earlier in the day.

3. Catch up quick

😤 People are moving out of areas with poor air quality, often because they’re too expensive. (Redfin)

📰 The ugly truth behind “We Buy Ugly Houses”. HomeVestors of America, the self-proclaimed “largest homebuyer in the U.S.,” trains its nearly 1,150 franchisees to zero in on homeowners’ desperation. (ProPublica)

🏡 California has 42% more single female homeowners than men. (Mercury News)

💻 Bank of America customer data exposed in IT provider breach. (BankingDive)

4. Freddie Mac: Mortgage buydowns are not worth it

According to Freddie Mac, more than half of borrowers paid discount points last year, a substantial jump from recent years, as they contended with the double whammy of elevated home prices and mortgage rates in the 7% range.

Despite homebuyers in 2023 buying more points, Freddie Mac found that the interest rate differential was negligible. Through November, the average rate for purchase borrowers paying discount points was 6.61%, versus 6.69% for those who didn’t pay points. That’s only an 8 basis point difference.

"This result seems to suggest that paying discount points may not be worth it from the consumers’ point of view," Freddie Mac researchers wrote.

5. Guild Mortgage announces acquisition of competitor Academy Mortgage

Guild Mortgage is set to take over its competitor, Academy Mortgage Corporation, potentially adding over 600 loan officers nationwide, the company confirmed Tuesday.

The addition of Academy Mortgage will extend Guild’s market share across its national footprint. Academy’s loan volume represents an approximate 25% increase in annual origination volume for Guild, based on results from both organizations through the third quarter of 2023, and the combined company would be the eighth largest non-bank retail lender in the country.

You’re all caught up. See you on Friday!

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