I’ve been saying for months that the much anticipated Fed rate decrease wouldn’t immediately have a huge effect on mortgage rates, since the prime rate the Fed just decreased in September wasn’t directly tied to Mortgage rates. Mortgage rates are more directly tied to the bond market. I figured it would take a couple of weeks for any decrease to sort of work it’s way around to mortgage rates. Whoops! Bad Me!
Last week, I, and everyone else, were pretty surprised to see mortgage rates INCREASE by nearly half a point. I mean that’s just wrong…..Right? Mortgages are more closely tied to the bond market and Treasury bonds rose, because the majority of investors are feeling pretty rosy about the economy’s future projections. Inflation numbers improved overall, but core inflation did increase a bit. That might indicate some underlying upward price pressure and makes economists nervous(Economists are always nervous). Add in a pretty spectacular September jobs report and we get a mortgage rate spike.
All that good news gets me wondering if the Fed’s expected rate cut before New Years is now circling the drain. I’m not alone there. Speculation about what the Fed’s going to do runs rampant right now. JP Morgan expects one or two rate cuts by year’s end. NAR economists have suggested possible small upticks in rates.
A better indicator for where mortgage rates may be going is the 10 Year Yield Treasury bond rate, as noted in this Marketplace article, which breaks it down really well:
https://www.marketplace.org/2024/10/09/mortgage-rates-going-up-again-rising-10-year-treasury-bond-yield/ This is a more solid indicator, because it’s tied more closely to mortgage rates than the Fed’s rate.
The consumer price index and the October Jobs report will have an effect on whether or not the Fed decreases it’s rate before New Year and if it does, that will have a small trickle down effect on mortgage rates eventually. Overall, I agree with those predicting a strong Winter for buyers who can afford to push through with their mortgage applications right now anyway. The decrease in buyers competing from the same reduced inventory of properties will give those active buyers more power at the negotiating table in the typically slower Winter months. I’m still feeling particularly bullish on the Spring Real Estate market having a huge season.
If you have any questions about where you sit with your potential, future mortgage consult one or more mortgage providers. I have some I could recommend. If you’re not quite there yet and have questions on where you might sit in the market and what’s currently happening in Real Estate, feel free to reach out to me. No obligation. No pressure. A consult is always free. If it’s free….It’s for me.
Have Fun!!!
Lew McConkey, Brook Realty, Serving Whitman Hanson & Surrounding Towns
(781)252-9789
If you have questions about your place in the current Real Estate market, as a buyer, seller or Landlord, Please feel free to call text or email for your free, no obligation consultation.