This week we have seen the JOLTS report (Job Openings and Labor Turnover Survey) showing hiring has slowed across multiple sectors with job openings trending lower. We also saw the ADP employment report show 54,000 new jobs, down from 104,000 last month. So what does this mean to mortgages and interest rates?
The Fed meets this month and at this time everyone expects the Fed to drop rates by .25 point. The Fed has been watching the labor market and inflation and with the labor market slowing, it looks like the Fed is ready to cut rates. Once the Fed meets we’ll have a better idea of how many cuts we may see this year.
What does this mean for mortgage rates? Mortgage rates have already been dropping. In the last month, we have slowly seen interest rates decline a little bit. Investors look to the future when it comes to mortgage rates, so the .25 point drop is already priced into rates. However if the comments from the Fed after the meeting indicate more drops this year than expected, we may see interest rates drop more. So it’s not really the interest rate drop that will affect rates, it’s the comments after the meeting.
When the Fed drops rates, it does help things like home equity loan rates and car loans, along with credit card rates. It doesn’t directly affect mortgage rates.
There is one more report due this week, tomorrow’s Jobs report. If that report shows more weakness, it could lead the Fed to look at dropping rates three times this year, rather than the two times currently expected.
Hopefully we see rates drop a little more before the end of the year but never a guarantee! If you are thinking about buying or refinancing, now is the time to make sure you are ready to go!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
