A softening labor market could bring some much-needed relief to mortgage interest rates

August is here, can you believe it?!  I hope you’re been enjoying your Summer so far!

I wanted to quickly connect with a breakdown what’s happening with mortgage rates and what you can expect moving forward.

A quick reminder:  These articles I share here are researched and written by me!  As part of my commitment to ongoing support for my clients and partners, I write these articles to help them understand what’s really happening in the markets, beyond the headlines and soundbites.

The Federal Reserve’s Role

The Federal Reserve (FED) is keeping a close eye on labor data to decide when and by how much to cut rates. This means they’re looking at things like job openings and initial jobless claims to make their decisions.

Inflation Trends

Good news on the inflation front: the growth rate of inflation has significantly decreased. While the FED is now focusing on the month-to-month changes, it’s clear that the overall year-over-year inflation has come down significantly. This is a positive sign for the economy and for future rate cuts.

FED’s Focus on Labor

The FED seems more comfortable with the current rate of inflation. We know this because they’re back to talking about their dual mandate, which includes maximum employment levels along with stable prices. They’ve made it clear they don’t want to see the labor market weaken too much, indicating a balanced approach to managing inflation and employment.

Specifically, the FED wants to see job openings decline, which is happening:

The other data line the FED is watching is Initial Jobless claims.  Some analysts think the FED will act once the four-week moving average climbs to about 300k, and in that respect, we are trending in the right direction:

FED Rate Cut Expectations

Looking ahead, it’s expected that the FED will cut rates at least once, possibly even twice in 2024. This is great news for homeowners and potential homebuyers, as lower FED rates typically lead to lower mortgage rates.

Mortgage Rate Predictions

Speaking of mortgage rates, there’s a positive outlook here too. The Mortgage Bankers Association is predicting that the average rate on a 30-year fixed Conventional mortgage will drop to around 6.5% by the end of 2024. So, if you’re considering buying a home or refinancing your mortgage, keep an eye on these rates as we expect them to start to decline this year.

What’s it all mean?

In short, the financial markets are showing signs of improvement with lower inflation and potential rate cuts on the horizon. 

If you got your mortgage in the last 18-24 months, an opportunity to refinance & save money every month could be on the horizon.

For anyone considering buying a home, lower rates will make homeownership a bit more affordable!

If you find this interesting or helpful, please feel free to share it with a friend, family member, or co-worker – it’s my goal to educate and empower as many people as possible during this incredibly unique time in housing!

Here is how I can help!

– If you are looking to purchase a new home or have questions about your mortgage, a potential refinance, the market, getting preapproved, etc., or

– If you are a Realtor or a Broker looking for a lender with great financing solutions to help educate your clients on the state of the market to help them feel good about their decisions,

Please call today – I am happy to help however I can!

Stay tuned for more updates and feel free to reach out with any questions!