Uncertainty around interest rates continues. Rest assured, we're doing our best to support our customers.
I hope this message finds you well. It is now the end of July and the summer is flying by. My kids are already dreading school starting next month, and there is a lot going on both nationally and locally as it relates to our economy and Osgood Bank. Here are some quick updates.
Interest Rates
In recent months, the Federal Reserve has increased rates at the fastest pace in three decades to cool consumer demand and bring record-breaking inflation figures under control. Policymakers approved a 75 basis point rate increase to the Fed Funds Rate in June, and then on Wednesday, July 27th, approved another 75 basis point increase.
Unfortunately, the rate increases appear to be far from over. Fed Chairman Jerome Powell suggested that the central bank will raise rates by another 100 basis points (1 percent) before the end of the year, with further increases expected in 2023 if inflation continues.
Inflation and Home Sales
Current inflation has reached levels not see in decades as energy prices spike, supply-chain constraints persist, and the war in Ukraine drags on. The Consumer Price Index jumped from 9.1% from June 2021 to June 2022, the largest year-over-year increase since November 1981.
Sales of new U.S. homes fell in June to the lowest level in two years due to rising mortgage rates and the continued trend of increasing home prices. Nationwide, the average rate on a 30-yar fixed mortgage climbed to nearly 6% in June and has since come down. Locally, the mortgage rates we offer are usually slightly lower than the national average, but our pricing does follow national trends. New single-family home purchases tumbled 8.1% to a seasonally adjusted annual rate of 590,000 units. That's the lowest level since April 2020, according to the Commerce Department.
The median house prices in the U.S. climbed 7.4% in June from the year-ago period to $402,400. There were about 457,000 new homes on the market at the end of June, an increase of 447,000 units in May.
Final Comments
Despite inflation concerns and rapid interest rate changes, Osgood Bank continues to perform well. Our customer base and communities are strong, and we have a very talented and caring group here at the bank with a service mindset. While there is a lot of negative news in the media these days, there are also a lot of good things happening locally.
I hope everyone is doing well and thank you again for supporting Osgood Bank.
