Weekly Mortgage Rate Update- 11-12-24

 

Which came first the chicken or the egg?  Did mortgage rates rise because the economy is improving or because of the election?

 

The economy was improving before the election

Economic data is what drives rates, and the presidency affects rates to the extent that they can impact the economy. The rise in rates began well before the elections after September jobs data and subsequent reports showed better economic news. While there are still some warranted concerns over the economy, the markets began to unwind their recession trades. Causing rates to rise since that first week of September.  

 

But elections impact the economy

A new administration means new economic agenda.  Pre-election the markets were pricing in a stronger probability that Trump would win. Stock prices increasing while bonds sold off causing rates to rise, a trend that is continuing now post-election.  The market reaction is based on expected growth and inflation increasing as the result. Both growth and inflation is negative for our rate outlook.  Also at top of mind for bond traders the view was that no matter who won the election , the federal deficit will continue to rise. But like everything else, the views will adjust to incoming data. 

 

Oh yeah, there was also a Fed meeting last week

Probably the least anticipated Fed meeting of all time. Which is saying something because it follows one of the most highly anticipated Fed meetings of all time we had in September.  There was nothing really of note as far as a policy shift at the meeting. It is largely expected they will lower another .25% in December and another 100 basis points in 2025.  Mortgage rates are already pricing in these expected moves.  It’s a 30-year investment so you do have to be forward looking on these things.

 

Back to our regularly scheduled programing

This week will have the CPI reading on inflation on Wednesday and retail sales on Friday.   Rates improved some towards the end of last week.  We are hoping it’s a sign we found the ceiling on rates, but today starts by giving up those gains and again testing the 10 year at 4.40%.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.