Mortgage rates are tumbling again as job openings hit 18-month low
Mortgage rates are falling again this week as investors — already convinced that the Fed will start cutting rates this month — weigh new data suggesting that the job market is softening.
Job openings fell to 7.67 million in July, down 237,000 from June and the lowest level since January 2021, according to the U.S. Bureau of Labor Statistics’ latest Job Openings and Labor Turnover Survey (JOLTS) report.
Nonfarm job openings at 18-month low
Yields on 10-year Treasury notes, a barometer for mortgage rates, were down 8 basis points Wednesday following the release of the JOLTS report for July. A survey of lenders by Mortgage News Daily showed rates on 30-year fixed-rate loans dropping for a second-consecutive day this week.
A separate survey by the Mortgage Bankers Association (MBA) showed that applications for purchase loans were up a seasonally adjusted 3 percent last week compared to the week before, but still down 4 percent from a year ago.
The MBA’s Weekly Applications Survey showed requests to refinance accounted for 46 percent of all mortgage applications last week. Although refi requests were essentially flat week over week, refinancing demand is up 94 percent from a year ago.
“Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly to 6.43 percent,” MBA Deputy Chief Economist Joel Kan said in a statement. “Purchase applications increased more than 3 percent over the week and are inching closer to last year’s levels, with government purchase applications leading the increase.”
Data released by ICE Mortgage Wednesday points to a homebuying and mortgage refinancing boom if rates continue to tumble.
Joel Kan
Mortgage rates falling
Since hitting a 2024 high of 7.27 percent on April 25, Optimal Blue data shows rates on 30-year fixed-rate conforming mortgages have come down by nearly a full percentage point, hitting a new low for the year of 6.30 percent on Aug. 28.
With inflation trending down toward the Federal Reserve’s 2 percent target, bond market investors who fund most mortgages are certain that the Fed will start cutting rates this month.
The question has become how big a cut the Fed will make on Sept. 18 — 25 or 50 basis points — and how aggressive policymakers will be in slashing rates at their final two meetings of the year in November and December.
The CME FedWatch tool, which tracks futures markets to predict future Fed moves, on Wednesday put the odds of a 50 basis-point rate cut on Sept. 18 at 45 percent, up from 38 percent on Tuesday.
Futures markets tracked by the CME FedWatch tool see an 86 percent chance that the Fed will bring short-term rates down by at least a full percentage point by the end of the year.
Fed Chair Jerome Powell and his colleagues on the rate-setting Federal Open Market Committee have been adamant that their decisions will be data driven.
Investors will be eager to see Thursday’s initial jobless claims numbers, followed by Friday’s payrolls report.
Economists at Pantheon Macroeconomics, who expect the Fed to bring rates down by 1.25 percentage points this year, are forecasting that payroll growth will continue to shrink, but that the unemployment rate won’t surge.
“Our 140K forecast for payrolls is slightly below the consensus, 165K, but markets likely will take an equally strong steer from the unemployment rate, which we expect — as do most other forecasters — to drop back to 4.2 percent, from 4.3 percent,” Pantheon economists said Wednesday in their latest U.S. Economic Monitor.
Source: https://www.inman.com/2024/09/04/mortgage-rates-are-tumbling-again-as-job-openings-hit-18-month-low/