It's been a great 40 days for mortgage rates. Let's dig into why!
30 year conventional mortgage rates - Mortgage News Daily
Shockingly Weak July Jobs Report
The massive 0.2% drop you see on August 1st came from the reaction to the July Jobs Report. In July, the U.S. economy added just 73,000 jobs, far below expectations. Even more striking were downward revisions to the May and June figures. This is standard for the previous quarter of months to be updated as more data comes in. President Trump immediately fired the Commissioner of the Bureau of Land Statistics claiming the data was rigged to make him look bad, a move that a president has never made before and potentially compromises any future data released by our country. The labor market softness led markets to sharply raise expectations for Fed rate cuts.
August 1 - 21st:
Early to Mid-August had rates mulling around 6.5-6.6%, slowly creeping upward as the reaction to the Jobs Report walked back marginally. August is generally a slow month for data releases and there isn't a Fed meeting either, which led to a couple uneventful weeks for interest rates.
Early to Mid-August had rates mulling around 6.5-6.6%, slowly creeping upward as the reaction to the Jobs Report walked back marginally. August is generally a slow month for data releases and there isn't a Fed meeting either, which led to a couple uneventful weeks for interest rates.
Powell Speech - August 22nd
Fed Chair Jerome Powell gave a cautious speech at the annual Jackson Hole Economic Symposium. While not committing to immediate action, he acknowledged rising risks to the labor market and signaled that a rate cut would be considered depending on how upcoming data unfolds. Quotes like this lowered mortgage rates by almost 0.1% intraday, “While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising, and if those risks materialize, they can do so quickly.” The speech drove down long-term bond yields and sharply increased market odds of a September rate cut (now at 87%) —raising expectations for lower borrowing costs to trickle into mortgage pricing.
The month ahead:
The Fed will meet on September 17 and will most likely lower interest rates 0.25%. This is already almost entirely priced into current mortgage rates. If they do lower rates, it's great for headlines but shouldn't dramatically move interest rates. If they do NOT lower interest rates and decide to wait again, interest rates will move upwards ~0.2% after the meeting.
Let me know if you want to discuss or have any questions!
Monthly RUNdown -July 18
