For a while back, I declared that we were in a declining priority rate environment.
Maybe I said it too soon, but the general thought was that the mortgage rates peaked with approx. 8% at the end of 2023 and have moved down ever since.
Did they move lower every day? Or every week or every month? No, of course not.
Mortgage rates, like all other things, do not move in a straight line -Up or down.
But if you zoom out, they have been lower as opposed to higher since then, and despite the last few days, it could continue to move lower.
The path forward for mortgage rates depends on the financial data
Whether mortgage rates will continue to come down will depend on the financial data ahead of us.
While Fed Collects eight times a year and makes occasional interest decisions, it is the financial data that is released every week that really matters.
This is what drives the bold policy to begin with and what supports consumer mortgage rates.
So if we want to know what’s next for mortgage rates (we all do, right?), We need to continue to look at the data.
And we don’t have to be hung up with a fed political decision and what it leaves in its immediate wake because the chances are that it will be a blip in the big scheme.
What means more is the economy of the economy that will determine if interest rates can come down more, remain flat or even get higher again.
Meanwhile, we have to digest an terrible lot of noise from Fed and Powell’s press conference.
And the usual quips about mortgage rates that are higher after a fat -rate cut.
But it always ignores all the movement that took place before the cut. Can anyone remember that mortgage rates fell about half a point in the last month?
Or that mortgage rates were in the 7s earlier as late as in late May?
Do they know that mortgage rates are hovering close to three-year-olds, despite the expected setback of the last few days?
And even with setbacks that could very well be temporary, the priority rates remain super attractive compared to recent levels?
Will the move higher as the latest cut is short -lived?
I noticed yesterday that mortgage rates often defy bold, that is, they move in the opposite direction of the day for a cut or hike.
For example, cut fat yesterday and the rates went up. The many times they wandered over the past few years, the mortgage rates fell.
The one time they fell on the same day as a bold-back cutting was back in November, when the rates saw a 15-BP swing lower, corresponding to the amount of today’s movement higher.
But remember that mortgage rates had risen about a full percentage point in the two months before, so they may have just blown some steam.
Also note that they continued to rise shortly after. So the relief was short -lived.
Maybe this movement will also be short -lived and the rates continue their downward trend when the dust settles.
We may look at the opposite of what we saw as the rates rose.
Instead of seeing periods of relief lower, we may be higher. After all, you can’t just go down into a straight line.
Like we did not go up in a straight line as mortgage rates rose from less than 3% to 8% in less than two years.
But as at that time it depends on the data, namely labor and inflation!
Over the past few years we struggled with inflation and couldn’t seem to come in front of it.
When we finally did, Labor came in too hot and made it difficult too bold to cut with conviction.
They eventually cut (nine months later) after working finally seemed to break, so if it continues, this is likely to be a blip on the card above.
And if inflation also remains under control even if we get the odd hot report, mortgage rates are likely to continue to move lower.
It will make the last few days completely forgetful in an otherwise obviously downward trend.