Last week we saw the Fed drop the Fed rate by a .25 point. How many expected mortgage rates to drop? I always get a lot of phone calls when people hear that the Fed dropped rates but that doesn’t mean the mortgage rates dropped. It does affect HELOC rates and things like car loans and credit cards.
Mortgage rates look to the future and since the Fed dropped the rate last week, we have seen mortgage rates move slightly higher. Not what any of us wanted to see but unfortunately what many thought might happen. After the Fed meeting there was Chairman Powell’s speech and this week several Fed governors spoke at different events. We also saw the Jobless Claims drop to 218,000, the lowest level since July. The Federal Reserve’s preferred inflation measure, the Core PCE, stayed steady. This meant prices weren’t rising quickly but they aren’t dropping either. Personal spending increased by 2.5% showing people are confident in spending although it does appear of lot of people are using credit cards when spending.
The concern now is the employment numbers and inflation. If the Oct jobs report is better than expected, we will probably see interest rates climb more. Right now investors are expecting the Fed to cut rates two more times this year. However if the economy shows that the labor market is not getting worse and inflation stays the same or gets worse, we may only see one cut – possibly none. That will cause mortgage rates to increase.
So what to do? Many have been looking at refinancing as rates have come down. If it still makes sense to refi, then I would move ahead with the refi. Maybe you need to be ready and then when we see the rates drop a bit, lock in your rate and get the refi done. If you are looking at buying, remember you can always refinance if rates do drop. When you find a home and get your purchase agreement accepted, talk to your loan officer and decide what to do. It may be worth locking right away so you are protected against any rate increases. No one expects rates to climb too much but you never know!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
