It has been a long and widely anticipated wait for all financial markets building up to the Fed’s annual economic symposium in Jackson Hole, Wyoming. As expected, Chairman Jerome Powell reiterated the Fed’s position to continue raising interest rates until inflation meets their desired level of 2%.
It is ironic that this is being said while the Fed’s live reports on current inflation news are coming in at lower inflation levels than the previous 4-6 months. In deference to the Fed, we need several more months of lower inflation reports before the Fed policy can pivot to a moderate one. It is interesting to point out once again that the Fed’s favored inflation number, the PCE, actually decreased in July. Judging from other Fed tools, i.e., consumer spending and personal income reports, it is evident that the economy is slowing, which is why I am comfortable in saying we are seeing the top in mortgage rates.
What’s Next for Mortgage Interest Rates?
As I have stated, mortgage interest rates track primarily with the ten-year Treasury Bond market. The Fed cannot directly control long-term bonds, but placing pressure on short-term rates can impact mortgage rates. For those who follow the interest rate markets, buying a two-year bond yields 3.4%, while the 10-year bond yield is lower at 3.03%. This should lead to the conclusion that this inverted yield curve will not be long-lasting, and an economic slowdown will occur. In my view, this indicates mortgage rates have peaked for this cycle. And perhaps, we will see a drop in rates.
Don’t Always Fall For Ads and Headlines
To successfully understand the markets, one must read between the lines between facts and sensationalism.
I will always provide accurate, real-time information and sound advice based on an individual’s needs. Here are a few mortgage loan rates I have available.
- Interest rate ranges are low to mid 3’s with bank deposit relationships.
- Without banking relationships, rates are in the 4’s.
- No tax return loans in the high 6’s and 7’s.
Our housing market has slowed slightly, but I’ve seen increased activity in the last few days. Remember a strong rule of thumb; buy when demand is softer, and you will be rewarded in the long run, especially in an area like Los Angeles.