Peace of Mind as Rates Back Down to 3-Month Lows

/blog/peace-of-mind-as-rates-back-down-to-3-month-lows/

Who knows what to believe anymore?

This isn’t a comment on political opinions (you can go to other blogs for that). This is a comment on finance, and what-the-heck is going on with mortgage rates. Not that we—nor homebuyers—should be complaining. All indications seemed to suggest that things were only going to go up from the 4.25 percent average we’ve been seeing for the last few months.

Then they started to drop… hitting a two-week low on Monday, a three-week low on Tuesday and finally a three-month low on Wednesday. There are still a few conservative lenders who are sticking with 4.25 percent for a 30-year fixed rate, but the current go-to offer is 4.125 percent (for top-tier applicants, mind you).

The big, logical question is “Why?”.

Going back to the lede of this post… no one can say for sure. But there are a few hunches.

One idea revolves around The Fed’s jobs report, released last Friday. All expectations were that it would be nothing but good news, considering that the ADP Employment Report and ISM Manufacturing Report—both released earlier last week—reflected positive growth, which in turn posits a positive Fed report. But that didn’t *exactly* happen.

On one hand, the number of jobs in the United States grew, adding an impressive 227,000 positions. But at the same time, unemployment also ticked up to 4.8 percent. Perhaps more disappointing than that was the sluggish growth in wages, which only moved forward by .1 percent.

It’s tough enough to gauge mortgage rates from week-to-week (as we’ve proven), much less all the way to the end of the year, and one month’s jobs report isn’t enough to imply what we can expect by December. However The Federal Reserve has implied that it intends to raise the Federal interest rate as many as three times during 2017. Too many more of these slow reports and that won’t be on the docket anymore.

Naturally, politics does play some hand in the matter. Regardless of who becomes president, a new president is going to result in some uncertainty in the markets. And investors showed a sudden predilection for conservation, putting money into relatively safe bonds. More bond buying means lower mortgage rates.

Although we should have learned our lesson about anticipating future rates, if you’re a homebuyer who was floating last week, you should seriously consider locking in. It’s tough to anticipate things continuing downward for too long.