Inflation calmed down in May, and further deceleration looks likely in the upcoming months. It also marks the first month in two years that wage growth outpaced consumer price inflation, improving the average standard of living. Moreover, low inflation means that the Federal Reserve should stop raising interest rates and possibly slash rates towards the year-end or early next year.
The yield on the 10-year Treasury is responding positively with a rate decline to 3.7%. That normally means the 30-year mortgage rate is around 5.5% to 5.7%. Of course, we know the mortgage rates have been near 7% recently, but the potential for a decline is real as we progress through the year.
By: Lawrence Yun