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The average rate for 30-year fixed-rate mortgages jumped 27 basis points Friday morning following the release of the government’s monthly jobs report. The rate is now 6.53%, according to Mortgage News Daily.
This is 42 basis points more than on September 17, the day before the Federal Reserve lowered its key rate by half a percentage point. Mortgage rates don’t track the Fed’s, but they loosely track the yield on 10-year U.S. Treasuries.
For mortgage rates, everything depends on the Fed’s next expectations. So there was a lot of anticipation before the release of this particular monthly report, since the last two reported a deterioration in labor market conditions.
“Indeed, the Fed’s decision to cut rates from 0.50 to 0.25 last month has a lot to do with the fear/expectation that reports like today’s will be rarer in the future. “future,” wrote Matthew Graham, director of operations at Mortgage News Daily. “The only saving grace here would be the idea that this is just one of a recent jobs report that has been mostly weaker and that perhaps the next one won’t be as damning for bonds.”
However, the report slightly changes the outlook for future rates, since most had assumed the trajectory would be lower.
“The MBA expects long-term rates, including mortgage rates, to remain in a relatively narrow range over the next year,” Michael Fratantoni, chief economist at the Mortgage Bankers Association, wrote after the release of the employment report. “This news will push mortgage rates to the top of this range, but we expect mortgage rates to remain near 6% over the next 12 months.”
Today’s homebuyers are very sensitive to rate changes as home prices continue to rise from levels a year ago. Stocks on the market are also still very low, which only keeps prices higher. Rates are a percentage point lower than they were a year ago, but the housing market has yet to see any real momentum.