Mortgage Rates Ease as Job Market Slowdown Continues

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Mortgage Rates Retreat as Job Market Slowdown Continues

Mortgage rates have been trending down this week, following the Bureau of Labor Statistics’ report that employers added fewer jobs in April and May than previously thought, and hiring by private companies was sluggish in June. After spiking following the June 27 presidential debate, rates are once again easing.

Job Market Slowdown Continues

The job market is slowing down, with employers adding an estimated 206,000 nonfarm jobs in June, which is 16,000 more than forecasters expected. However, government hiring accounted for more than one-third of the increase, according to Mortgage Bankers Association Chief Economist Mike Fratantoni.

Payroll Growth Continues to Slow

Payroll growth is slowing, with private payrolls, excluding private education and healthcare, rising by just 54,000 in June, which is well below the prior six-month average of 101,000. This trend is likely to continue, with forecasters at Pantheon Macroeconomics expecting growth in total payrolls to drop below 100,000 before the end of Q3.

Fed Expected to Cut Rates

The Federal Reserve is expected to cut rates in September, with futures markets tracked by the CME FedWatch Tool showing investors are increasingly certain of this outcome. However, most investors don’t expect rates to come down by more than half a percentage point this year.

Yields on 10-Year Treasurys Fall

Yields on 10-year Treasury notes, which often indicate where mortgage rates are headed, fell 7 basis points on Friday. At 4.28 percent, yields are back to roughly where they were before spiking after the June 27 presidential debate.

Mortgage Rates Ease

Mortgage rates have been easing, with rates for 30-year fixed-rate mortgages falling for a third consecutive day following the Fourth of July holiday. According to rate lock data tracked by Optimal Blue, rates have pulled back to an average of 6.96 percent, down from a high of 7.27 percent on April 25.

Conclusion

The job market is slowing down, and mortgage rates are easing in response. The Federal Reserve is expected to cut rates in September, and yields on 10-year Treasury notes are falling. While the trend is positive for mortgage rates, it’s essential to remember that the housing market is still recovering from the pandemic, and many homeowners are still feeling the impact of higher rates.

FAQs

Q: What is the current state of the job market?
A: The job market is slowing down, with employers adding fewer jobs than expected in April and May, and hiring by private companies being sluggish in June.

Q: What is the expected impact on mortgage rates?
A: Mortgage rates are expected to ease in response to the slowing job market and potential rate cuts by the Federal Reserve.

Q: When is the Federal Reserve expected to cut rates?
A: The Federal Reserve is expected to cut rates in September, according to futures markets tracked by the CME FedWatch Tool.

Q: What is the current yield on 10-year Treasury notes?
A: The current yield on 10-year Treasury notes is 4.28 percent, down 7 basis points on Friday.

Q: What is the current average rate for 30-year fixed-rate mortgages?
A: The current average rate for 30-year fixed-rate mortgages is 6.96 percent, down from a high of 7.27 percent on April 25.

Author: www.inman.com

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