Welcome to June! Let’s talk about mortgage rates…This past week, rates unfortunately moved higher due to a few key factors:
• Treasury Department Needs More Revenue: The government needs to sell more debt to fund spending, and recent auctions haven’t been as strong as hoped. This pushes interest rates higher.
• Fed Signals Higher Rates for Longer: Several Fed officials have hinted that a rate cut isn’t likely soon, and some even suggest a possible rate hike if inflation remains stubbornly high.
• Rising Oil Prices: Higher oil prices tend to go hand-in-hand with higher mortgage rates, as they contribute to overall inflation.
While these factors are pushing rates up, there’s also a silver lining:
• Consumer Sentiment is Up: Despite economic uncertainty, consumer confidence actually improved last week.
• Inventory of Homes for Sale Improving: According to a recent report, number of homes for sale, which has long hampered housing sales growth, has returned to pre-pandemic levels in 14 Of The Largest U.S. Markets. Rising inventory will help home prices moderate and affordability to rise.
Looking Ahead: Jobs Data Is Key
The upcoming jobs report is a major event that could influence rates. If the report shows strong job growth, it could further solidify the Fed’s “higher for longer” stance. However, weaker job numbers might spark renewed talk of rate cuts, potentially leading to lower mortgage rates down the line.
Predictions are for a 195,000 rise in new job growth in May versus a lower-than-expected 175,000 in April. Average hourly earnings in May are expected to rise 0.3 percent on the month for a year-over-year rate of 3.9 percent; these would compare with April’s rates of 0.2 and 3.9 percent, which were also lower than expected. May’s unemployment rate is expected to hold unchanged at April’s 3.9 percent which was less tight than expected.
Here’s the Bottom Line:
Mortgage rates are currently trending higher than they were a few weeks ago. However, the economic picture is still evolving, and upcoming data releases, especially the jobs report, could cause them to fluctuate.
Staying informed is crucial! I’m always here to answer your questions and help you navigate the home-buying process in this dynamic market. Let’s chat to see what options are available to you!
