Inflation is finally cooling

Inflation is Finally Cooling – Maybe

Casey Fleming

Inflation—you can’t live with it, you can’t live without it. Well, most of us would prefer to live without it, but zero inflation only exists when the economy stagnates and drives unemployment up and wages down.  But inflation is on our minds this year because we’ve become accustomed to not having to live with it. So, it’s good news that inflation is finally cooling.

The Consumer Price Index (CPI) came out this morning at 5.7%, lower than the 7.9% expected by most analysts, and much lower than any reading since this spring. That’s still too high for the Fed’s goals, and it will take a while before long-term interest rates (think mortgages) come down. Investors will have to see a trend established, and then interest rates will come down slowly, cautiously. As I’ve written many time, mortgage interest rates tend to jump up, and settle down.

Deeper Dive: Inflation and Mortgage Interest Rates

Still, the U.S. 10-year Treasury Bond, which is used as a benchmark for mortgage interest rates, dropped from about 4.000% to under 3.85% this morning. That may not sound like a lot, but it’s a big drop for a single day, and shows us that investors (the same ones who buy mortgage-backed securities and thus help establish the interest rate you pay for mortgages) are open to the possibility of lower yield.

One month’s reading is not enough to definitively say that inflation is finally cooling, but it’s a very good sign of things to come.

The Freddie Mac Mortgage Market Survey—a reading of what borrowers actually locked conforming loans at for the last week—came out this morning at 7.08% at 0.9 points, ever so slightly higher than last week’s reading of 6.95% at 0.8 points.  Expect next week’s reading to show improvement. In other words, if you are in process and haven’t locked your interest rate yet, the next seven days could be the right time to do so.

Want to know what your interest rate would be? Call me at (408) 348-3442.


Casey Fleming, Mortgage Advisor and Author of The Loan Guide: How to Get the Best Possible Mortgage

About Casey Fleming: Casey Fleming is a veteran mortgage advisor (NMLS 344375) and Author of The Loan Guide: How to Get the Best Possible Mortgage.  Casey advises clients throughout California, and is based in the heart of Silicon Valley.  He writes articles regularly for several online publications, is a subject-matter expert for two prominent finance-related sites, and is regularly quoted in articles for many other publications.

This article represents the opinions of Casey Fleming, and not necessarily those of any company or organization cited or mentioned in this web site.  This analysis was prepared with the best information available at the time it was written.  We do not have any magical insider information about bond markets, real estate markets or mortgage markets that would make economic projections any more reliable than any other source.  No warranty is made that the outcome will reflect the projections in this article, and neither the author nor are responsible for decisions that you make regarding your choices about your real estate or mortgage or those of your clients.

Fair use and redistribution

This article is copyrighted and may not be used or reprinted without permission.  However, we encourage you and freely grant you permission to quote short passages directly from the article, provided that when doing so, you attribute the author by linking to or this page, so that your readers can learn more about this topic.  Your link must be a “dofollow” link.

For any other use, please contact us at

Leave your thought