Mortgage Rates DROP AGAIN ??

2/24-2/28 Headline: Mortgage Rates Continue to Fall Ahead of BIG Jobs Week.

Homebuyers had another huge win last week as rates fell fast and hard. Global economic and stability concerns were definite contributors of falling rates, but we also saw a good inflation report that was a nice cherry on top of a great week for rates.

The average rate on a 30-year fixed rate conventional loan is 6.60% (from 6.76%) - but our clients are securing rates as low as 5.99%! Sign up for our weekly Friday rate texts to stay in the know on where rates are week by week! It's a must for anyone planning to buy or refinance in 2025!?

Economic Turmoil Points To Lower Rates

Last week was another rough week for the stock market- in part because of global stability concerns. Everyone saw the highly publicized confrontation between Trump and Zelensky and that had global markets concerned.

On top of that, tariffs are officially back on the table for Mexico and Canada, both of whom have not been able to find a way to fully alleviate Trump's border concerns. ?U.S. Commerce Secretary Howard Lutnick said the two countries have "done a reasonable job" securing their borders with the United States, though the deadly drug fentanyl continues to flow into the country.

Finally, data on government layoffs and terminations continue to pour in, and because of that, we're seeing jobless claims rise to their highest point this year. Don't forget, the government sector is responsible for creating the second highest amount of jobs over the last 2 years (440,000 jobs in 2024 and 709,000 in 2023)! Trump claims he wants to keep that number near 0 and terminate many of the existing federal employees, which could wreak havoc on the jobs data.

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Consumers tried to stage an attempted revolt of major corporations like Amazon to voice their concerns, whether that relates to high prices, "corporate greed", or an attempt to influence corporate politics by having a blackout day on 2/28. Amazon (one of the biggest potential victims of the blackout) actually reported higher sales on 2/28, so the blackout didn't have the effect it hoped for. However, if such a cause spreads and becomes effective, it could have major implications for the overall health of the economy.

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PCE Data Turns Powell's Frown Upside Down

Inflation data from last Friday was received overwhelmingly positive by analysts.?The price consumption expenditure (PCE) index, which is the Fed's favorite tool for inflation, came in right at expectations, which meant it declined month over month.

The craziest part about the PCE report - and likely the best indicator that future inflation reports could show inflation falling - is that consumer spending is falling! U.S. consumer spending fell for the first time in nearly two years in January and the goods trade deficit widened to a record high as businesses front-loaded imports to avoid tariffs, setting up the economy for weak growth or even a contraction this quarter. We'd likely see rates fall quite a bit in response to a contraction.?

The inflation report was “good, but we’re not done,” said Jose Rasco, chief investment officer for the Americas at HSBC Global Private Banking and Wealth Management. “So that prudent patient Powell, as I call him, is going to remain in play, and I think he’s going to wait.”

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Rate Cut Predictions

After last week's data, June 18th has become the near certain date for the first rate cut, but still no word from Fed members on how much certainty they need to start cutting.

The big drop we've seen over the last month has happened without any rate cuts! That's because the Fed funds rate doesn't necessarily result in lower mortgage rates. TLDR; if you want to learn more about the connection between the Fed funds rate and mortgage rates, click here.

BIG labor data reporting starts on Tuesday. How much of an impact has the government sector terminations had on the labor market? We'll find out!

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Key reporting dates this week:?

Mon, 3/3: S&P final U.S. manufacturing PMI, Construction spending, ?ISM manufacturing. Auto Sales

Tues, 3/4: ?Fed President's speaking

Wed, 3/5: ADP employment, Factory orders, Fed Beige Book

Thurs, 3/6: Initial jobless claims, U.S. productivity (final), U.S. trade deficit, Wholesale inventories

Fri, 3/7: U.S. jobs report, U.S. unemployment rate, Consumer credit

If I can be of any assistance, I'm always here to help so if you have any questions or just want to learn more, feel free to email or call/text me at 512-701-1819.?

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Best,

Eric