Rates hold Steady, Markets Await Friday’s Jobs Numbers for Direction
Mortgage rates remained flat week to week according to the Freddie Mac Primary Mortgage Market Survey released September 5th. The markets await the release of the highly anticipated August jobs report. Even though rates have come down over the summer, home sales have been lackluster. On the refinance side however, homeowners who bought in recent years are taking advantage of declining mortgage rates to lower their monthly payments.
Mortgage applications increased 1.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 30, 2024. “Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly. Purchase applications increased more than 3 percent over the week and are inching closer to last year’s levels,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were slightly down but continued to show strong annual gains as borrowers with higher rates have been refinancing to lower their monthly payments.
Inflation edged higher in July, according to a measure favored by the Federal Reserve as the central bank prepares to enact its first interest rate reduction in more than four years. The Commerce Department reported Friday that the personal consumption expenditures price index rose 0.2% on the month and was up 2.5% from the same period a year ago, exactly in line with the Dow Jones consensus estimates. The report comes with the markets pricing in a 100% chance of a rate cut in September, with the only uncertainty being whether the Fed will take the incremental step of lowering benchmark rates by a quarter percentage point or being more aggressive and moving a half-point lower.
The US economy appears to be on the knife’s edge, and Friday’s jobs report will be the deciding factor as to the next direction. The August jobs report is expected to provide some much-needed clarity as to whether the labor market is slowing gracefully or spiraling quickly as was indicated by the recent weeks’ bleak batch of employment data. “The next set of job numbers released this week will be among the most consequential in a while,” Tuan Nguyen, US economist at RSM US, wrote in commentary issued Wednesday. Friday’s jobs report should provide further reassurance that the labor market is merely softening and not collapsing, economists predict. Either outcome, however, could ultimately determine the size of the Fed’s next rate cut.
