The past few weeks have been interesting when it comes to mortgage interest rates. One day we think things will continue to improve and the next the market gets worse!
Over the past week, market conditions have improved slightly. Treasury yields continue to decline which is helping ease pressure on interest rates and improve monthly payment affordability.
One of the biggest issues has been the conflict with Iran and opening the Strait of Hormuz to commercial shipping. A flare up involving Kuwait and Bahrain has renewed concerned about oil prices and inflation. This could slow the pace of rate improvement. Both countries are still trying to finalize a deal that would extend the current truce even though there is still fighting going on. The big question is when will we see a deal and how will the markets react. No one knows that for sure.
The labor market is cooling gradually. April data showed the hiring rate declined while job openings remained steady. This points to a slower but still stable labor market. The May numbers will come out this Friday. That report will be a key factor in the next Fed meeting which happens June 17th. A softer report could support rate cut expectations. However no one expects a rate cut at this meeting. A stronger report could push yields higher which would hurt interest rats.
The Fed continues to balance slower economic momentum with persistent inflation. This weeks economic data will be important in their next move.
The reality is no one really knows what will happen with mortgage rates in the long term, we expect they will slowly improve but how much? As long as inflation is a concern, it will be hard to see rates drop by much. However every little bit is helpful!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
