September Industry Rates | Capital Markets Rate Sheet
Quick Economic Overview
Jerome Powell, the Fed Chair, came out swinging two weeks ago at the Jackson Hole Business Conference with a highly hawkish tone related to interest rates and the Fed’s total commitment to controlling inflation. The Fed is willing to cause some pain in households and the economy into an actual economic recession to fight inflation. “Our responsibility to deliver price stability is unconditional,” said Powell at the conference. “Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance.”
What does this mean for the commercial real estate market?
Market sentiment is being pulled in two different directions. On the one hand, we have positive economic information such as low unemployment and positive job reports pushing fundamentals in real estate up – rents are increasing, and vacancy is decreasing. On the other hand, macro perspectives are at play, impacting sentiments such as inflation talk, the prospect of increased rates, and geopolitical issues.
Mortgage rates fluctuated greatly so far in the third quarter of 2022, with the average 30-year fixed rate swinging from 5.70% at the end of June to 5.13% on Aug. 18, according to Freddie Mac. “If fears of recession outweigh fears of inflation, mortgage rates may come down,” – Odeta Kushi, deputy chief economic at First American.
What’s Coming Up?
CPI numbers from August will be released next week and will largely impact how much the Fed will decide to raise rates. This inflation report could make the difference between a 75 bps rate increase and 100 bps.