Wow, what a wild ride for mortgage rates last week! Let’s unpack what happened and what it means for you.
First, the Fed meeting adjourned on Wednesday afternoon, and as expected, they paused a hike of its key interest rate (called the Fed Funds Rate). The bond market reacted favorably, and as a result, mortgage rates improved to their best levels in nearly a month. Yeehaw, right!?!
Also Wednesday, the ADP report on private sector job creation was released and came in lower than expected, just over 100,000, which is quite a stinker. We also watched as the 10-year Treasury yield – that I told you about recently – dropped below the important 4 percent rate. For a minute, all signs were pointing to lower mortgage rates ahead.
Even the Freddie Mac survey of average mortgage rates that was released last Thursday showed a nice trend of improved lower averages for both the 30-year and 15-year rates.
Remember how I’ve told you about the good news, bad news dichotomy when it comes to mortgage rates? Good news often causes rates to rise – which is bad news for affordability for homebuyers. Well, that’s exactly what happened on Friday when the Job Report was released.
The most important data released each month, the government’s Jobs Report, surprised to the upside, more than doubling the job growth number that was expected and revising higher the past jobs report job creation number by more than 100,000 jobs. It was crazy pants!
As a result of the Jobs Report, markets reacted swiftly and dramatically as they do not like surprises and tend to overreact when they’re surprised by data, let alone the most important data of the month. So, although rates did have a nice improvement last week, much of the ground we gained, we’ve given back, and we’re back in that same range we’ve been in for the past six weeks or so.
What could really help rates continue to improve would be to continue to see inflation move lower, and if and when the Fed starts to cut its key interest rate, this could be very helpful to homebuyers looking for lower rates. For now, we are where we are.
As for this week, there aren’t really any high-impact economic reports, so what will be driving the bond market will be the buyer demand for the additional debt that the US Treasury plans to sell in the form of 3, 10, and 30-year bonds. The market appetite to gobble up the debt could show up in how mortgage rates behave this week.
If you are considering a purchase this year, let’s be sure and strategize so when I see rates improving, I can be there to jump on a favorable rate for you when the time is right. Call or text me, and let’s talk.
