Besides providing great service and products to our broker clients, the management and Account Executives at Orion feel that it is important for you to understand the economic factors that are influencing your client’s mortgage rates. And although rates didn’t move much, last week provides us with a good snapshot of what is driving rates, which, as it has been for quite some time, in turn is driven by pandemic news.

In some areas our brokers are telling us that they’re seeing a few more “for sale” signs in neighborhoods. We thought this might happen due it being the summer, and families traditionally shifting when not in school, but also some taking advantage of the large amount of appreciation. Yes, economies are controlled by supply and demand, and recent economic data highlighted that demand continues to exceed supply in many areas of the U.S. economy and that policy makers are divided on what actions are needed to return things to “normal”. U.S. economic output officially surpassed pre-pandemic levels although many analysts were predicting a higher annual growth number for the second quarter.

But while consumer spending exceeded expectations, a higher headline Gross Domestic Products (GDP) number was subdued by supply chain bottlenecks which depleted inventories as well as a jump in imports and a decline in government spending. Orion’s brokers continue to hear about this issue. Along those lines, the labor market continues to be a concern: lots of jobs but few applicants, perhaps due to government benefits.

During the last cycle policy makers couldn’t explain why inflation was so low despite the lowest unemployment rate in decades and now they struggle with understanding the current situation where there is still slack in the labor market and inflation that may or may not be on a tear. The Federal Open Market Committee did not make any major policy changes following last week’s meeting and the press conference following the meeting identified multiple views as to when the committee should begin to reduce the Fed’s balance sheet.

In the meantime, as we enter August (already),Orion’s mortgage rates remain low as the calendar inches closer to the start of school and the full expiration of enhanced jobless benefits. The expectations for a lot of economic growth have not materialized, and if the economy continues to not improve quickly with the surge in COVID cases, these mortgage rates could be with us for a while.

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