As we come back to the work week following the Memorial Day weekend, I want to take a moment to reflect on the true meaning of the holiday. It’s a time to honor the brave men and women who made the ultimate sacrifice for our country. While we often kick off summer with barbecues and time with loved ones, let’s remember the significance of their service. I hope you had an enjoyable weekend with loved ones!
Now, let’s dive into what’s been happening in the mortgage market. This past week, we saw interest rates climb to their highest levels since January. The 30-year fixed rate averaged up .05 percent according to Freddie Mac, a slight increase from last week. This rise is partly due to a recent downgrade of U.S. debt by Moody’s, citing rising debt and deficit levels. Additionally, a recent 20-year bond auction had lackluster demand, pushing Treasury rates higher, which impacts mortgage rates.
There’s also some speculation that a proposed new tax bill, which would extend 2017 tax cuts, is contributing to rate uncertainty due to concerns about increased government deficits.
However, it’s not all about rates! We have some encouraging news on the housing front. While home prices have reached record highs, the growth rate is actually slowing down, hitting its lowest level since 2012. This “rebalancing” of the market is good news for potential homebuyers, as it can help boost their purchasing power.
The bottom line is that market volatility remains high, with rates fluctuating based on economic news and fiscal policy. Looking ahead to our short week, we’ll be watching for key inflation data and more Treasury auctions.
Also, on Thursday, we’ll get a look at the latest report on Q1 GDP (gross domestic product). It’s predicted to be consistent, showing minus 0.3 percent, which will likely kick up further discussion around whether we’re headed for recession or not.
On Friday, the Fed’s favorite inflation indicator comes out. The year-over-year rate is expected to drop from 2.3 to 2.1 percent. This brings the target inflation rate even closer to the Fed’s target range of 1-2 percent, which is good news.
As always, I’m here to help you understand these shifts and how they might impact your homeownership goals. Please don’t hesitate to reach out with any questions! You’re always welcome to send me an email, or text/call me at 818.307.6072.
