Mortgage Rates Hit a 15 Month Low!

Hello everyone! It looks like the tide might finally be turning in the housing market! After three years of rate hikes since September 2021, we’re on the verge of the Fed announcing their first official rate CUT. This could be the spark we need to kickstart a new cycle and get buyers back in the game. Are you ready!?

Read time: ~4 minutes

Rates ended DOWN compared to last week, and volatility was HIGH. Rates are in the mid 6’s for most loan types without paying discount points. Paying discount points can get you in the high 5’s.

Full-Time Job Losses Signal Labor Market Shift

Friday’s report on September Non-Farm Payrolls revealed that the labor market gained 142,000 jobs—falling short of the 161,000 predicted. Interestingly, the unemployment rate edged lower to 4.2%, a slight improvement.

However, what caught attention were the revisions to previous months. June and July’s job numbers were quietly revised down by 61,000 and 25,000, continuing a trend we’ve seen for over a year now. Strong initial job numbers followed by downward adjustments—it's becoming the norm.

For context, the 3-month average job growth is now 116,000, which is less than half of what we saw in 2023, where the average was 232,000. The good news is that we aren’t seeing large-scale job losses—at least not yet.

Additionally, since June 2023 we have lost approximately 1.5 million full-time jobs and have had a huge gain in part-time jobs. In the past year, we’ve swapped a million full-time jobs for part-time work, which highlights a significant shift in the quality of jobs being created.

This slowdown puts pressure on the Fed to adjust its stance on interest rates, which could potentially ignite a new housing market cycle, driven by lower rates. However, the shift won’t happen overnight; it will take some time for buyers who’ve been watching from the sidelines to feel confident enough to reenter the market.

As more people hear about falling rates, we could see an uptick in first-time buyers and existing homeowners looking to upgrade.

Mortgage Rates Hit A 15 Month Low!

Finally, some relief on the rate front! Mortgage rates have taken a much-needed dip, with the market reacting to anticipated Fed rate cuts. The national average has now settled around 6.25%, according to Mortgage News Daily, which is the lowest level since April 2023. Compare that to the peak of 8.03% we saw last October, and we are in a much better place!

So, why aren’t buyers rushing back into the market?

Well, some buyers are holding off until after the election, others are worried about job security, and a chunk of folks are waiting for rates to drop even more. But here’s the kicker—will they?

My mortgage rate guru, Matt Graham from Mortgage New Daily, reminds us that rates sometimes go up after the Fed cuts interest rates. I know it sounds backward, but here’s why: mortgage rates drop when bond traders expect good news (like Fed cuts). They buy bonds, pushing rates down. But once the cut happens, they often sell, pushing rates back up.

So, while a drop in rates is great news, it’s worth knowing that some bumps could come right after the cut before we settle into lower rates. Something to keep in mind for buyers debating on jumping back into the market!

Important Economic Dates This Week

Wednesday September 11th

• CPI (Consumer Price index) - Headline and CORE

Thursday September 12th

• PPI (Producer Price Index)

• Jobless Claims

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