The past week in the mortgage market has been a story of stability, with mortgage rates holding near 10-month lows. This steadiness comes even as the Federal Reserve’s July meeting minutes were released and stock markets saw some notable shifts.
What’s really going on with rates, and what should you watch for next? Let’s dive in.
The Fed Weighs Its Options
Last week, the Federal Reserve released the minutes from its July meeting, offering a rare glimpse into the intense debate happening behind closed doors. Think of it like a high-stakes family meeting where everyone is trying to agree on the best way to manage the household budget.
The majority of Fed officials decided to keep the federal funds rate steady. Their goal is to navigate a complex economic landscape: sluggish GDP growth, persistent inflation (hovering above their 2% target), and a resilient but softening labor market. They’re also grappling with the potential impact of new tariffs, which could push prices up in the near term.
Interestingly, two officials, Christopher Waller and Michelle Bowman, dissented and argued for a rate cut, a move not seen in over three decades. They believed inflation (excluding the tariff effects) was already close to the target and that the economy was showing signs of weakening. For now, the majority is playing a waiting game, opting to hold firm until economic indicators provide a clearer picture.
So, how does this affect you? While the Fed’s rate is a key factor, mortgage rates are more nimble. They react to what the market expects the Fed to do next, not just what it does. The recent Jackson Hole speech from Fed Chair Powell, where he hinted at a stronger possibility of a September rate cut due to labor market concerns, caused rates to dip even further. The market is already pricing in a potential cut, so when and if it happens, it might not have a dramatic effect on mortgage rates.
The Latest Rate and Housing Data
According to Freddie Mac’s weekly survey of average rates, the 30-year fixed-rate mortgage (FRM) remained unchanged in the most recent survey and only a slight uptick from a year ago, when it was 6.46 percent, but welcome stability for many. Freddie Mac’s Chief Economist, Sam Khater, noted that while rates have come down over the summer, many potential homebuyers are still on the sidelines, waiting for rates to fall even further.
Here’s a snapshot of some other key economic data points:
• New Home Sales: Consensus predicted sales would remain flat; however, actual sales numbers came in at 652K vs. the 628K predicted.
• Case-Shiller Home Price Index: Home price inflation is slowing, with prices up 2.1% year-over-year in June, a decrease from the prior month. This suggests the housing market is continuing to cool.
• GDP: The second quarter GDP growth is expected to be revised slightly upward to 3.1%, but overall consumer spending remains modest.
• Pending Home Sales: After a drop in June, pending home sales are expected to retrace slightly, indicating a shaky market for home sales.
The Bottom Line for You
Mortgage rates are hovering near 10-month lows, offering a great opportunity for those ready to make a move. While the stock market has been volatile—with some recent tech stock declines and the upcoming historically rough month of September—history shows that when stocks decline, rates tend to follow.
The Fed is keeping a close eye on incoming data, and so are we. With major inflation reports like the Core Personal Consumption Expenditure (PCE) Index on the horizon, we’ll continue to monitor the market and keep you informed.
Ready to take advantage of these stable rates? Reach out to me to discuss your options or to get a personalized rate quote. You’re always welcome to send me an email or text/call me at 818.307.6072
