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It is Good to Know What is Driving Mortgage Rates

Orion’s brokers know that financing a home is much more than an interest rate, but rates do factor into things which is why Orion’s management and AEs watch the markets. Last week we had a stronger-than-expected July jobs report. Since the economy in the United States is driving by jobs and housing, economic statistics that concern those two items are especially important… like Friday’s jobs data. The numbers announced by the government showed a weak job market, which typically suggests lower rates. But…

A sharp slowdown in the U.S. jobs market drove stocks higher while bond yields fell on speculation the Federal Reserve won’t be forced to raise interest rates any time soon. The yield on 10-year Treasuries declined six basis points to 4.62 percent. Mortgage rates dropped.

But since the end of February our bond market, and therefore interest rates, have been greatly influenced by changes in the price of oil and the impact on consumers. Oil wavered last week as traders weighed negotiations over the Strait of Hormuz. When talks and progress are on again, off again, it makes reacting to the news difficult.

U.S. employers unexpectedly cut jobs in July and hiring in the prior two months was revised lower, suggesting the labor market is weaker than previously thought after surprising strength earlier this year. Nonfarm payrolls decreased 23,000 last month following a combined 103,000 downward revision to the May and June figures. But the unemployment rate fell to 4.1 percent as labor force participation continued to slide. Friday’s jobs report was not just much weaker-than-expected, it showed that the economy shed jobs during July, which puts the Federal Reserve in a conundrum, since inflation is still elevated and sticky.

This week the economic calendar is highlighted by Wednesday's Consumer Price Index (CPI)for July, followed by Thursday's Producer Price Index (PPI) and Friday's retail sales figures. Economists expect core CPI inflation to ease to 2.5 percent, while the reports will offer investors fresh clues on the Federal Reserve's policy path.

Thatis a lot for your clients to keep track of, which is why so many rely onbrokers and on Orion’s AEs to watch interest rates but more importantly offersuperior service and tailored products to help finance a home. Just ask us!

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