The common rate on the 30-year-fixed mortgage jumped 27 basis points Friday morning following the release of the government’s monthly occupation report. The rate is now 6.53%, according to Mortgage News Daily.
That is 42 basis points higher than Sept. 17, the day before the Federal Save cut its benchmark rate by half a percentage point. Mortgage rates do not follow the Fed, but they loosely follow the yield on the 10-year U.S. Moneys.
For mortgage rates, it is all about what the expectation is next for the Fed. As such, there was a lot of anticipation leading up to this particular monthly explore, since the last two pointed to weaker labor market conditions.
“Indeed, the Fed’s decision to cut by 0.50 vs 0.25 last month had much to do with the awe/expectation that reports like today’s would be in shorter supply going forward,” wrote Matthew Graham, chief functioning officer at Mortgage News Daily. “The only salvation here would be the notion that this is just one farm outs report in a recent run that’s been mostly weaker and that perhaps the next one won’t be so damning for bonds.”
However, the write-up does shift the outlook slightly for rates going forward, since most had assumed the trajectory would be moderate.
“MBA’s forecast is for longer-term rates, including mortgage rates, to remain within a relatively narrow range over the next year,” the Mortgage Bankers Coalition’s chief economist, Michael Fratantoni, wrote after the jobs report was released. “This news will go mortgage rates to the top of that range, but we do expect that mortgage rates will stay close to 6% on the next 12 months.”
Today’s homebuyers are highly sensitive to rate moves, as house prices continue to flight from year-ago levels. There is also still very low inventory on the market, which has only served to muzzle prices higher. Rates are a full percentage point lower than they were a year ago, but the housing make available has not seen much of a boost yet.