What’s Happening Now With Jobs, Inflation, and Rates

We’ve watched as mortgage rates have remained rather steady over the past three weeks and according to Freddie Mac’s weekly survey, averages remained below 3 percent for the 30-year fixed. 

Friday’s job creation numbers dragged on markets showing a disappointing 266,000 new jobs created when a number much closer to 1 million was expected. Interestingly lots of job openings remain unfilled as many Americans are making an average of $18 per hour staying home and not returning to work, thanks to government support programs.

I suspect the trend of rates below 3 percent could be changing as we get some important inflation data this week. The Consumer Price Index (CPI) is expected to jump from last month’s outsized 2.6 percent to 3.6 percent year-over-year. There’s not much consensus over how mortgage rates will be affected but as we know, rising inflation tends to cause mortgage rates to rise, so this week could be the week we see rates march above 3 percent.

Keep in mind that these rates are still historically, amazingly low and opportunities abound for you if you are still needing to refinance or if you are considering purchasing a home. In fact, if you have higher interest rate debt with variable rates tied to the CPI, now is a great time to explore refinancing to pay off those debts before their rates rise thanks to the rapidly increasing CPI.

As for what I’m watching this week…

Consumer prices in March, headlined by a 0.3 percent monthly rise for the core, exceeded expectations. The market consensus estimates for April are monthly increases of 0.2 percent overall and 0.3 percent for the core. Annual estimates are a comparison skewed 3.6 percent overall and 2.3 percent core.

As for wholesale inflation, acceleration in March was much greater than expected at a monthly 1.0 percent overall versus 0.5 percent in February. A monthly headline increase of only 0.3 percent is the expectation for April.

On Friday we’ll see the latest retail sales numbers which in March got a big lift from stimulus checks, surging 9.8 percent on the month to nearly double estimates. Stimulus payments may also factor into April’s report where the consensus is a 1.0 percent monthly increase.

I’ll be keeping an eye on all of it for you and report back next week. Remember to reach out if you’d like to explore your refinance or next home purchase!