We got hit hard by the higher-than-expected inflation report last week.
As of yesterday, MortgageNewsDaily was reporting the average 30-year fixed rate at 7.44%.
That’s up from 6.91% just three weeks ago. That’s not a small move.
We got hit hard by the higher-than-expected inflation report last week.
The economy came back and kicked us while we were down with yesterday’s Retail Sales report.
There are no holes to poke in this. The numbers absolutely crushed expectations on all levels.
I’m still in the process of eating crow (a lot of it) for all the times I’ve mentioned I expect retail sales to pull back heavily.
I’ll see if I have more commentary to share next week after I have more time to digest this nasty meal.
How’s Brian feeling about mortgage rates?
Even less optimistic, but still waiting for the shoe to drop. (updates below)
- 3-month outlook (June 2024) – My whole thesis on rates coming down relied on the job market showing cracks. It hasn’t. Now I think rates have to go higher before they can go lower.
- 6-month outlook (September 2024) – Wild-ass guess =
We’ll be in the same range that we are now… 6.8% – 7.2%.The job market is actually improving, consumers keep spending, and inflation is resurging…a lot can happen in 6 months, but until the data starts trending in the other direction it’s hard to bet on lower rates. It looks like we might have a chance to challenge last year’s high of 8%. - ***12-month outlook (March 2025) – Wilder-ass guess = My bet is on something breaking in the next 12 months, the stock market correcting as a result, and mortgage rates improving to the 6.0-6.5% range.
***The wildcard is the US government. If they don’t do some massive budget cuts to get spending under control soon I could see the demand for US Treasury debt falling off a cliff and that could drive all rates higher. Or maybe the 30-year fixed mortgage will be seen as a safer bet and the yield between the two will no longer correlate as it has in the past?
Other Relevant Macro News
- Labor market remains steady, jobless claims remain low.
- US Budget deficit, also not helping rates, tops $1 trillion.
The Week Ahead
- There isn’t much left on tap for the week that typically moves the needle for mortgage rates. That said, with all the panic in the bond trading world right now, it’s not hard to add fuel to the fire. There are plenty of Fed member pressers this week, including Fed Chair Jerome Powell later today. They could at least stop the bleeding if they show a united front about holding rates steady. That said, if a few start throwing out the possibility of rate hikes into the ether, we’ll likely see rates continue higher.
