State of Rates — State of Rates

October 6, 2023

Latest Market Commentary.

This week had all the makings of a big week for rates, and it was just that! One of the key factors influencing the direction of interest rates is job growth. A strong job market signals a growing economy, contributing to inflation. On the flip side, a slowing job market shows potential weaking in the economy which slows inflation - and rates ride the coat tales of both. Rate watchers, especially loan officers, are in the odd spot of rooting for bad economic news that would push rates down.

The week began with rates inexplicably rising rapidly on Monday. The real gut punch came on Tuesday with the JOLTS number (this a report on the number of job openings), unexpectedly showing 9.6 million job openings. The market acted swiftly, losing nearly 100 bps in pricing and pushing rates to new multi-decade highs.

All eyes were on today’s job report, which crushed expectations and defied the odds with a whopping addition of 336,000 new jobs, pushing rates to new highs.

Next week, the much-anticipated September CPI report will be released on Tuesday. The world will be watching to see if the Fed’s aggressive rate-hiking policy is taking hold or if inflation is stubbornly persisting. While it’s hard to say what will happen, it’s safe to say it will move the market wildly one way or another.

Your Weekly Market Movers.

Tuesday

Core CPI Report - M/M September

Core CPI Report - Y/Y September

Should I Lock or Float?

We are strongly biased towards locking rates at application vs. floating until the data tells us otherwise. If you are greater than 60 days out and have a major appetite for some risk, there is potential upside by waiting until you’re 30 days out or less, but you’ll need some luck!

The Housing Market in Three.

1.) Active inventory decreased, and for-sale homes are trailing behind levels from a year ago by 2.6%.

2.) New listings, a measure of sellers putting homes up for sale, were down by just 1.2% from one year ago.

3.) The median listing price grew by 0.7% over last year.