Weekly Mortgage Rate Update- 02-11-2025
Weekly Mortgage Rates
February 11, 2025
Rates have stabilized over the past few weeks; will this be the week they make a move?
It was another event filled week, but rates ended up about the same after the dust settled. Let’s review.
January’s employment reading wasn’t a market mover
On Friday, the employment data showed 143k jobs created in January, slightly lower than expectations, but the prior 2 months were revised higher. The 3-month average is strong at 237k jobs per month. Much better than the more sluggish numbers we had over the summer. The data for this report is based on surveys (with a very low response rate). The information is filled in based on assumptions and internal data modeling. We bring this up now because January had updates that affect the modeling with new census bureau data that added 2.9 million to the population and employment increased by 2 million people. The result is that the unemployment rate dropped from 4.1% to 4.0% based on these new metrics. Not necessarily because unemployment dropped, but because the metric to come up with the figure has changed moving forward.
Speaking of assumptions, the final revisions to the jobs data for 2024 showed 598,000 fewer jobs were created than previously reported. This is better than the previous estimate that the number would come in at 818,000 fewer jobs than reported. In addition to an “ok” jobs report, wages grew at an annual pace of 4.1%. This is inflationary and twice as high as the Fed would like to see. No reason for a change in Fed policy to pause cutting the Fed funds rate based on this data.
There are the threat of tariffs and then there are actual tariffs
Yesterday Trump announced 25% tariffs on all steel and aluminum imports, regardless of country. The help US manufacturers compete and level the playing field. Also, on the agenda is reciprocal tariffs that will be put on other trading partners that have tariffs on us. This appears to be a tariff that is not negotiable. Unlike the tariffs imposed on Canada, Mexico and China that are being used as leverage to accomplish the administration’s goals. “There are ‘punitive tariffs’ like the ones recently threatened with Canada, Mexico, China and Columbia over immigration and drug-smuggling issues…additionally there will be structural long-term tariffs- Senator Bernie Moreno
CPI inflation on Wednesday is the main event for the week
As reported in the Wall Street Journal, the CPI report due for release tomorrow is especially important because it includes turn of the year price resets. January is an opportunity for companies to update their pricing for the new year. The past few years we have seen prices spike in January. So, this report is more important than most CPI readings and will show if any real inflation progress has been made. If it does come in lower than expectations it could trigger a rally in mortgage rates. But, we wonder just how much weight the markets will put on the inflation reading if they are concerned about future inflation rising based on tariffs. We will find out tomorrow.
Bessent reveals strategy to bring down rates by focusing on the 10-year Note instead of the Fed policy.
We brought up last week Trump hasn’t been heckling Powell like he did in his last administration. Bessent revealed that the game plan is to focus on bringing the 10-year rate down instead of the focus on Fed action. If successful, this is good news for mortgage rates. We talk about the 10- year Note often in the weekly updates as its movements are closely tied to the trend in mortgage rates. It is the bellwether for all longer-term rates. We have already seen that lowering the Fed rate doesn’t always translate into lower mortgage rates. Funny thing is that if they are successful in lowering long term rates, the Fed will follow suit and lower their rate as well, as the reasons for it being elevated would have improved.
“He wants lower rates. He is not calling for the Fed to lower rates," Bessent said. Trump believes that "if we deregulate the economy, if we get this tax bill done, if we get energy down, then rates will take care of themselves."
Also, after criticizing Yellen for her decision to sell shorter term debt instead of longer-term debt which is now causing a massive amount of debt that must be repackaged and sold again this year. Bessent said he will continue with Yelle’s short-term debt strategy for a little longer, as he does expect rates to come down based on their plans. Since mortgage rates are tied to longer term debt this helps mortgage rates as it means less supply on long term debt coming on the market. Also, the next refunding announcement didn’t show an increase in the debt auction.
Uncertainty makes it hard for rates to make a move
We just mentioned some really promising developments that could help mortgage rates, but rates are stuck for the moment because there is just too much uncertainty. There are things the market loves happening, like the focus on government spending and deregulation, but they aren’t yet certain about the policies on immigration, tariffs, and the wild card items like taking over Gaza and the escalation in those tensions just this morning. We will see if this week rates make a move higher or lower, but the uncertainty will most likely still weigh on how much they can move for now.
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Source info for today’s update:
US job growth slows in January; unemployment rate at 4.0% | Reuters
Trump Imposes Global 25% Steel, Aluminum Tariffs - WSJ
Bessent says Trump is focused on the 10-year Treasury yield and won't push the Fed to cut rates
Also credit to: MBS Highway and Rate Alert
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