Mortgage Market Update: Navigating the Sideways, with a Potential for Downward

Hope you're having a great week! I wanted to give you a quick update on what's happening in the mortgage market, as I know many of you are keeping a close eye on interest rates.

This past week, we've seen rates hovering near two-month highs, but interestingly, they're showing signs of a potential downward trend. As Freddie Mac reported, the 30-year fixed-rate mortgage trended toward 6.85%, a slight dip from the previous week. We're seeing a bit of stability, which is great news as we approach the spring homebuying season.

What's driving this? Well, the Fed's January meeting minutes revealed they're taking a cautious approach, wanting to see further progress on inflation before making any more rate adjustments. ?This makes sense, as inflation is still above their 2% target. However, the hint that they might pause balance sheet reduction has brought some market certainty and helped keep rates in check. It’s a bit like they're saying, "We're watching closely, and we'll act if needed to maintain stability."

We also saw a drop in housing starts, likely due to the harsh winter weather, and Walmart's sales forecast was a bit of a downer, suggesting potential consumer pullback. While this might sound concerning, it actually helped improve bond prices, which in turn nudged rates lower. It’s a funny balancing act.

Interestingly, we've seen a rapid decrease in mortgage rates over the past few days, even without a major economic catalyst. This suggests that market sentiment is playing a significant role, with investors buying bonds in anticipation of a potential economic slowdown. Whether this trend continues depends on upcoming economic data, especially the Fed's favorite inflation gauge, the Core PCE, which we'll be watching closely later this week.

Essentially, rates are moving sideways with a hint of a possible break towards 2025 lows. The potential pause in balance sheet reduction is acting as a sort of safety net, preventing significant rate increases in the near term.

As always, I'm here to help you navigate these fluctuations. If you're thinking of buying, selling, or refinancing, let's chat about how these market shifts might impact your plans. You’re always welcome to reach out to me by simply sending me an email or calling/texting me at 818.307.6072.

In the meantime I’ll be keeping an eye on all of the above for you and report back.