Hope you’re having an enjoyable week! As we navigate the ever-evolving mortgage landscape, I wanted to share some insights into recent market movements and what they might mean for you.
Last week, we saw an interesting dynamic unfold. Amidst global economic uncertainties, particularly around potential tariffs, investors sought the safety of bonds. This “safe haven trade” increased demand for bonds, pushing their prices up and, consequently, bringing mortgage rates down to their lowest levels this year. It’s a bit like a seesaw – when uncertainty rises, bond demand often follows, and rates tend to dip.
Adding to this, the Federal Reserve announced a pause in their Quantitative Tightening (QT) policy. Think of QT as the Fed gradually selling off bonds they acquired earlier. Pausing this means they’ll hold onto their current bond holdings, which helps to keep demand steady and prevents rates from spiking. This provided a bit of breathing room in the market.
Interestingly, Freddie Mac reported last week that the 30-year fixed-rate mortgage averaged 6.64%, a slight dip from the previous week and notably lower than this time last year. This stability, as Freddie Mac’s Chief Economist noted, even spurred an uptick in purchase application demand – a positive sign!
However, the market pendulum has swung a bit this week. The renewed focus on tariffs is now putting upward pressure on interest rates. We’ve seen the largest two-day rate increase since February, with the average 30-year fixed rate climbing. This shift is partly due to investors reacting to the potential economic implications of these tariffs, including concerns about trade slowdown, increased Treasury issuance, and potentially lower foreign demand for U.S. Treasuries.
Looking ahead, tomorrow brings a key indicator to watch: the Consumer Price Index (CPI). This report, which measures consumer inflation, is a big one for influencing interest rate movements. The current consensus suggests a modest increase in overall CPI, but core inflation is still anticipated to be above the Fed’s comfort level – and these figures don’t even reflect any potential tariff impacts yet. We’ll also get the Producer Price Index (PPI), which gives us a look at inflation from the producers’ perspective.
While daily market fluctuations can feel a bit like a rollercoaster, my commitment to you remains constant: to provide you with clear, informed guidance tailored to your individual needs. Whether you’re a current homeowner considering refinancing, a prospective buyer navigating your options, or a valued referral partner, please know I’m here to answer your questions and help you make informed decisions.
Let’s connect if you’d like to discuss how these market shifts might impact your specific situation. You’re always welcome to send me an email or call/text me at 818.307.6072.
