I can only write about the unchanged 30-year fixed at 3.75% three times a week; but what I am writing today is not about what rates are today, but where will they be in the next 3 months…
We have seen a real mixed bag of economic data for the past three months or more. Earnings increases looked to be passing 2.5% only to be stuck in the mud. Inflation is decelerating, home sales have fallen, and confidence in the future is not as rosy as it was after the election. Today's jobs report was a big miss with only 138,000 new jobs created in May. Which is nearly half the number that ADP predicted. Participation has fallen again, while March and April were revised downward. The 10-year bond yields fell to their lowest level since November 10, 2016. All equity markets have ignored today's reports and rallied to new record highs. (The Dow is up 7.3% YTD).
The Fed is trigger-happy to raise rates this month, and they might because they will need to have the ammunition to help as the recession begins to take hold. These higher rates hurt everyone's wallet and slow down the economy. Look at all the empty stores in NYC. Retailers are getting crushed! Real estate price increases are double the rate of income gains. Times are changing, and they are changing quickly!
I am not saying that our economy is crashing, but that it is slowing down and when that happens mortgage rates go down as well. I think we will see rates drop at least another 1/4% over the next couple of months. The Fed probably won't raise rates a third time this year as the economy stalls a bit. Lower rates increase affordability for mortgages and that is good for the economy.