In the upcoming months, the markets, as well as investors, will be closely watching for any signs of inflation pressure along with the recent cooling off in economic data. The Federal Reserve has stated that any change in monetary policy will be determined by incoming economic data.
The market will be keeping an eye on the incoming numbers from the Consumer Price Index (CPI) and the Core Personal Consumption Expenditure (PCE), both key inflation measures. Recent data has seen both the CPI and Core PCE spike to levels not seen in quite some time, and we would normally see a mortgage rate increase in the headlines.
However, mortgage rates remain just above all-time lows with the 30-year fixed-rate mortgage hovering around the 3% level. One reason for current low rates has been the heavy buying of Treasury securities from foreign and domestic investors as well as the Federal Reserve through its asset purchase program. As bond prices increase and decrease, rates tend to move in the opposite direction. In this case, prices are moving higher, thus the lower rates.
The markets will also be closely monitoring jobs data, consumer confidence and spending, and manufacturing data, as well as the numbers from the housing sector. Incoming quarterly earnings data will also be scrutinized to gauge the health of corporate America, another determining factor that gives signals on the overall health of the U.S. economy.
It’s just common financial sense. If the economy continues to grow at even just a normal pace while the over nine million open jobs available slowly get filled, interest rates, as well as mortgage rates, will have to move higher.
Fed Chair Powell recently said, “We’re digging out of a very deep hole. We have made a lot of progress. We have a long way to go.” Translation: Yes, rates may go up, but we do not think there will be a big jump.
Bottom line: Mortgage rates are lower now than they were before the pandemic-induced shutdowns. A recent survey found that fewer than 25% of eligible homeowners refinanced their homes in the 12 months ending April 2021. Now is the time to get potential buyers and those thinking of refinancing off the fence and into a mortgage application to take advantage of this low-rate environment.
Source: Mortgage Market Guide
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
