Mortgage Rates: Worth a Look

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There are two things for our clients to keep in mind. First, jobs and housing power the U.S. economy. Second, nothing drives down rates like a recession: lower rates are offered to motivate people and companies to borrow. Friday the Labor Department reported that few jobs were created in August, and this mediocre jobs report means that the Federal Reserve’s Open Market Committee is almost certain to cut the rates it sets (most notably the overnight Fed Funds rate, the rate at which banks loan each other money).

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It may also mean that mortgage rates, based on supply and demand, might finally be poised to fall. Orion has already seen this to some extent: Mortgage rates dropped to new 2025 low on Friday as the 10-year Treasury yield dropped. Unemployment has risen, and new hiring has ground to a virtual halt. Inflation is still above the Fed’s desired target, but it appears that the Fed’s focus is more on the languishing jobs market and economy.

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Current Mortgage Rates

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A 25-basispoint cut (.25 percent) is the most likely move. But our AEs remind broker clients that last September, when the Fed cut its benchmark interest rate, 30-yearmortgage rates actually rose, illustrating a key point: The central bank doesn’t control mortgage rates, though its decisions help set the tone. The true driver of fixed mortgage rates are 5- and 10-year Treasury yields, which dropped on the weak jobs report, down to about 4.09 percent as of Friday afternoon. That figure was above 4.2 percent in recent weeks.

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Orion’s management and our AEs never advocate trying to time interest rates and instead focus on helping our clients with great service and products that are tailored to meet their needs. Don’t expect the Fed’s decision itself to materially impact mortgage rates in the short term. People who want to buy and are financially ready to do so should take advantage of more inventory and more opportunities for negotiating. Sellers in most markets are starting to reset expectations on pricing and are prepared to negotiate in a way they have not over the past few years.

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Talk to your Orion AE to see what kind of products we have, and how we can help you help your borrower!

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