Mortgage interest rates have climbed over the past couple weeks and it doesn’t look like we will see much correction. Last week the Fed met and didn’t change rates as was expected. They are expected to raise rates .25% in March when they meet again.
Last Friday the employment numbers came out for January and the nonfarm payroll report showed new jobs created in January at 200,000. Economists had expected the numbers to come in between 170,000 and 180,000. The jobless rate remained unchanged at 4.1%. The average hourly earnings showed an increase of 0.3% on a month-over-month basis and 2.9% for the year. The increase in average hourly earnings shows the impact of the states new laws for minimum wages at the start of the year. There were 18 states that had minimum wages increases in January 2018.
There are many people talking about inflation and whether the Fed should raise rates more. The Fed’s preferred measure of inflation pressure at the consumer level is the “core” personal consumption expenditure index. That number showed a month over month gain of 0.2% and an annualized reading of +1.5%. Those numbers are definitely lower than the Fed’s stated target of 2.0%. So at this point the numbers are not showing a threat of inflation – at least not yet.
This week the economic calendar is much lighter, there is a Treasury auction of $66 billion in the form of 3 year, 10 year and 30 year treasury notes Tuesday through Thursday. Congress is also be working on the budget as the current resolution that is keeping the government running expires at midnight tonight (Feb 8th).
At some point there will be a rally of some sort – but if you are in the market for a new home, I would be cautious about interest rates – chances are better that they will tend to increase rather than decrease at this point. You can lock in your rate once you have an accepted purchase agreement. If you do that, you know what your rate is and you don’t have to worry that rates will keep increasing! We expected interest rates to increase this year and for now, it looks like it that is definitely happening! Remember these rates are still very good – we are spoiled – but rates have been much higher in the past! Don’t let it stop you from buying a home!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
