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Here’s what we’ve got for you today:

1. Anti-Climatic CPI Print 📝

2. Mortgage Delinquencies Reach Record Low 🏡

By the way, this article on Negative Rate Pressures is the most clicked link in this newsletter, you should check it out if you are interested.

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Nuwave Rates Today 📉

Anti-Climatic CPI Print 📝

The much anticipated July CPI Print was released this morning…and it was a little underwhelming.

Headline CPI rose 3.2% year-over-year (forecast was 3.3%). Month-over-month prices rose .2% (exactly as forecasted).

July ended the 12-straight months of declines.

The index for shelter was by far the largest contributor to the monthly increase, accounting for over 90 percent of the increase. The Labor Department said:

Overall, this report was right down the fairway, with no overwhelming positive or negative news - and we are seeing that reflected in the MBS market today with no major moves.

What does this mean for mortgage rates?

This data was right in line with the expectations set by many economists. This is why you are not seeing a ton of movement in rates today.

As we said in our Fed Lunch & Learn Edition - the Fed is gathering two more key pieces of data before their next meeting in mid-September: August Jobs Report & August CPI.

For now, all the data points towards the Fed holding rates where they in September.

The Fed watch tool has the probability of the Fed holding rates at over 90% after this report.

We now have more than three weeks before the next major data point - August Jobs Report (released Sep 1). In that time period, I would expect interest rates to continue to hover just under or right at 7% as we see today.

This could be the new normal until at least early next year. This CPI report further entrenches the idea that Core CPI is stickier than we like to believe and it may take a while to reach the Fed’s 2% goal.

For clients who are preapproved and out looking - this should be encouraging. Clients continue to have the opportunity to ask significant seller concessions to pay for discount points, closing costs, and prepaid items.

When rates begin to fall, that opportunity will disappear - so use this time wisely.

Mortgage Delinquencies Reach Record Low 🏡

The delinquency rate or mortgage loans on 1-4 unit residential properties decreased to 3.37% on all loans at the end of Q2 (down 27bps from a year ago).

This is the lowest delinquency rate since the survey began in 1979.

Despite low delinquency rates on mortgages, there are early signs of possible consumer credit stress. Delinquencies are rising for other forms of credit such as credit cards and car loans.

With the rapid increase in home prices over the last 24 months, consumers have found themselves with all-time highs in home equity.

While we are still seeing the “lock-in effect” entrenching borrowers in their current homes, I would not be surprised to see a surge in refinances and sales to pay off credit card or auto debt at the first sign of interest rates falling.

The Cul-de-Sac

Mark your GCal

1. September 1 - August Jobs Report

Thanks for reading - that is all we have for today 😎

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— Michael F DiLucchio