Although mortgage rates have been steady in recent weeks, perhaps demonstrating that “summer doldrums” really do exist, Orion’s brokers like knowing what is going on with the economy, and why rates haven’t moved much. In general, rates continue to be low primarily due to the economic expansion in the United States being slower than the experts had predicted it would be six months ago.
An uptick in COVID cases due to the delta variant shook markets last week as the yield on the 10-year Treasury note fell almost 10 basis points on Monday. The movement in the financial markets was somewhat unexpected as the uptick in cases had been widely reported for the last few weeks. But the bond markets, including mortgage-backed securities, mostly recovered as the week progressed and the focus turned to improving outcomes for the infected as hospitalizations and deaths have not risen in proportion to the number of infections. Given the outcomes, worry about a return to less socialization and the resulting effects on the economy waned.
Mean while supply shortages continue to weigh on activity in most industries which is preventing stronger rebound in economic growth. Orion’s AEs and brokers are reporting that, in their areas, things from faucets to cars are still on backorder. We are hearing, however, that the inventory of houses for sale is loosening up slightly, a good sign for home seekers and our brokers who are financing them.
Orion’s brokers know that housing and jobs drive our economy. Job openings remain near record highs with many industries reporting difficulty in filling open positions. Although no change in rates is expected by the Federal Reserve’s Open Market Committee, this week all eyes will be on the Federal Reserve as committee members are expected to discuss the winding down of the asset purchase program in light of heightened inflation and a strong economic recovery.
Orion’s business is helping our brokers with products, service, and pricing to help your clients, not of predicting rates. But if the last few months has been any indication, aside from the usual summer doldrum ups and downs, mortgage rates could be stable for quite some time.