While mortgage rates are currently the lowest they’ve been all year, additional improvement might be hard to come by soon.
In case you missed it, the 30-year fixed fell to 6.52%, per Mortgage News Daily, its best reading since early October.
The move lower was initially driven by a weak jobs report, and later helped on by a dovish Powell speech at Jackson Hole.
Long story short, the economy is worse than we all thought and labor is at risk of breaking.
As such, the Fed will likely cut at its next meeting in September and bond yields have fallen, all good news for mortgage rates. But what next?
How Do Mortgage Rates Keep Falling From Here?
The issue now is that the 30-year fixed is at its best levels since nearly September.
At that time, mortgage rates were the lowest seen since February 2023, when the 30-year fixed briefly touched 5.99%.
So we’re arguably in a pretty good spot as it stands, and certainly much lower than the 8% rates seen in October 2023.
The problem is it might be tough to move any lower in the immediate future. Many think that Fed rate cut day (if it 100% comes) will be the day mortgage rates move lower.
This isn’t how it works, and in fact, mortgage rates have often risen on the day of an actual Fed cut day.
That’s because Fed stuff is telegraphed and baked in ahead of time, and by the day of the cut, other things might be happening.
Or you just get a sort of sell the news situation where mortgage rates bounce a little.
Also, the Fed doesn’t set mortgage rates to begin with.
Anyway, what’s important to look at between now and September 17th is the economic data that is released.
This is always the case, but it’s even more important given what has transpired lately.
Recall that President Trump recently let go of Bureau of Labor Statistics (BLS) commissioner Erika McEntarfer after she supposedly fudged the numbers.
The numbers, of course, weren’t good and made Trump look bad. Can’t have that!
But it makes you wonder what the jobs report will look like next. And what the preliminary 12-month jobs revision will look like too.
Lots of Economic Data Between Now and the Next Fed Meeting
Before the Fed meets next month and provides its always-important FOMC announcement, there’s going to be a lot of economic data.
We’ve got the Personal Consumption Expenditures (PCE) price index report this Friday, which is the Fed’s preferred inflation gauge.
There’s a decent chance that comes in hot given the tariffs and sticky inflation of late.
That could cause mortgage rates to creep back up from their low levels at the moment, though it could go other way too.
It’s just that chances are bonds will be defensive and more focused on the jobs report, which comes out next Friday September 5th.
That jobs report will be very closely watched because of the recent shakeup that took place at the BLS.
If we’re arguing that the old statistician got canned for reporting bad numbers, what’s the next report going to look like?
Does the administration want it to look good? I would assume so, even if it’s counter to their goal of getting rates down.
But they’re also creating a new-look Federal Reserve who might do their bidding regardless, and lower the federal funds rate to at least make the government debt cheaper to pay off.
Logically, it wouldn’t help mortgage rates though, so you wonder what the plan is there if they truly want to help home buyers.
Without soft economic data, it’ll be difficult for mortgage rates to continue marching lower.
Especially when you’ve also got upside risk of inflation due to the tariffs, with more and more reports of rising prices, due to, you guessed it, tariffs.
Makes you wonder what the path is to even lower mortgage rates, and highlights the risk of mortgage rates backtracking toward 7% yet again.
Something the housing market (and prospective home buyers) likely won’t be able to stomach.
Read on: Should You Wait for Mortgage Rates to Fall Even More Before Refinancing Your Mortgage?
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.