Good morning: The September jobs report showed a gain of 110,000 jobs nationally. That's great news coming on the heels of August's job report where there was a net 4,000 job loss. This means that mortgage rates may stay the same until the Federal Reserve decides what they want to do with the borrowing rate. As you may remember, the Fed. decided to cut its rate by 1/2% at its last meeting. Predictions are that they will continue with a 1/4% rate cut at their next meeting in a couple of weeks followed by one final 1/4% cut before the end of the year.
Understand that mortage rates usually fall before an anticipated Fed. rate cut and often rise when the rate is cut. In other words, it works in inverse proportions. More importantly, mortgage rates tend to trend down in the winter and up in the summer. I would expect mortage rates (currently at 6.25% on a 30 year fixed O.A.C.) to fall slightly by the end of the year. But not too much. Perhaps to 6% on a 30 year fixed mortgage.
Does this mean we're headed into a refinance period? I don't think so. Credit is still tight and will probably remain that way until mid-year next year at the earliest. If you're looking to refinance, have your financial house in order (good credit, savings, etc.). This will make it easier for you. If you don't, you're either going to have to wait or sell.
Eventually, we'll see brighter days again. Real estate is a cyclical business and those that understand this will prosper. Have a great day!
Paul
Paul McFadden
The rates have not only been based on jobs. I hope the rates fall a little bit more. We will see.
Thanks, Dave. I agree with you although it seems like any piece of economic news these days contributes to volatility. Take care.
Paul