When asked about the December 10th rate cut, Powell said it was “not a foregone conclusion — far from it.” That single comment wiped out a month’s worth of progress, with the market losing 33 basis points yesterday.

In one sentence, Powell effectively took back all the mortgage rate gains we’ve seen recently.

Graph below shows what happens when the market is Spooked .

The other challenge is Treasury Secretary Bessent strategy of issuing more short-term debt and less long-term ie 10y. This could negatively affect the Mortgage rates.

My take: Though my frustration with Powell is obvious, the reality is that interest rates are still far lower today than at any point in the last few years. In this market, we think in inches, not feet, every small movement in rates sparks a reaction.

Fed Day: All Eyes on Powell

The Fed is expected to cut rates by 25 basis points this morning, but the real story will come after the 11 a.m. announcement when Chair Powell speaks. He’s been known to take a bit of a “Debbie Downer” tone, so we’re on edge and ready to lock in our clients as soon as he starts talking just in case.

The Fed also announced plans to end its runoff of Treasuries in the coming months and begin purchasing Treasuries again in 2026 very good news for long-term rates. For perspective, the Fed was buying tens of billions of dollars per month in Treasuries in 2020, totaling over $2 trillion that year. Those massive purchases were a big reason rates were so low at the time.

Mortgage applications are up, though not as much as expected. The market has largely priced in today’s rate cut and the one anticipated for December, so we don’t expect major rate drops for the remainder of the year but of course, that could change.

My take: If you’re thinking about refinancing, today’s rates are worth locking in.

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There are still a few key data points guiding the Fed as it prepares for the October 29th rate cut decision.

The Chicago Fed’s Labor Market Indicators show the unemployment rate ticking up from 4.3% to 4.4%, signaling some softening in the job market. Auto delinquencies have also increased, while housing remains well below pre-pandemic levels, showing relative stability in that sector.

Rates are holding steady for now, but with the Fed’s decision and the 10-year Treasury hovering near 4%, it’s shaping up to be a busy week ahead. We’re all watching closely and hoping for lower yields.

Have a fantastic rest of your week!http://www.YourApplicationOnline.com

September CPI Report Highlights:

• The Consumer Price Index (CPI) came in 0.1% cooler than expected, with year-over-year inflation moving from 3.0% to 2.9%.
• The Core CPI (which excludes food and energy) was also 0.1% below expectations.
• Shelter costs, making up 44.4% of the Core Index, came in softer than expected.
• Owner’s Equivalent Rent (OER) roughly 33% of the Core Index rose only 0.1%, another encouraging sign of cooling inflation.
• Overall, this is good news for the Fed, supporting the case for continued rate cuts. The next Fed meeting is October 29th, where markets are pricing in a 0.25% to 0.50% cut.

Have a fantastic weekend, see you on the other side!

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The government shutdown continues to have a real impact on the market, creating uncertainty and limiting access to key economic data. Investors are watching closely as the 20-year bond auction takes place at 10 a.m. this morning. The level of demand in that auction will be a strong indicator of investor confidence and will directly influence rate movement.

If demand is strong, we could see yields (and therefore mortgage rates) improve slightly. However, if participation is weak, it may signal caution in the market and put upward pressure on rates.

Let’s not let the shutdown slow us down. the world keeps spinning and the rates are at their lowest point in two years.

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Home affordability is a big deal. While roughly two-thirds of Americans can afford to buy a home, many choose not to, often because of lifestyle preferences, mobility, or uncertainty about the market. The remaining one-third, however, simply cannot afford homeownership and may never be in a financial position to do so.

This divide highlights one of the biggest challenges in today’s housing market: rising home prices and limited inventory continue to outpace wage growth, especially for first-time buyers. Even with rates moving lower, affordability remains a major barrier for millions of Americans hoping to enter the market.

There are options. Rural Housing is 100% financing as well as VA loans. FHA is 3.5% but many Down Payment Assistance Programs are available. Conventional has a 3% down payment options.

Let’s talk through your specific scenario and give you options. http://www.YourApplicaitonOnline.com

That’s the short of it. Oil impacts everything from manufacturing to shipping and distribution and ultimately hits the consumer’s wallet when purchasing to filling up the tank.

If lower oil prices help keep inflation in check, the Fed will be that much more likely to continue lowering rates.

On the rental side, affordability is now the best it’s been in four years—another factor helping to bring overall inflation down.

Here’s an interesting side note: Americans are moving far less than they used to. Historically, about 15% of the population changed residences each year (and closer to 20% back in the 1960s). Over the past year, that number has dropped to just 11%.

It could be all those 3%’ers with their fantastic rate they don’t want to give up?

Rate are moving in the right direction and we see the activity growing. We expect that mobility % to increase substantially in the coming years.

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The government shutdown may end by Friday, according to Kevin Hassett, Director of the National Economic Council. Uncertainty, however, is never good for business.

The mortgage spread the gap between mortgage rates and the 10-year Treasury yield serves as a confidence gauge for lenders. The tighter the spread, the more optimistic lenders are about borrowers not flipping the loans. It’s about stability.

My take: Rates continue to trend lower, and we expect to see them solidly in the 5’s by year-end. As rates fall, more buyers are jumping back into the market, creating renewed competition and even bidding wars for the most affordable homes.

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Builders are skittish by nature, so when they start showing more confidence, it’s worth paying attention. They’re working with inventory that can take a year or more to bring to market, especially when new infrastructure is needed before construction even begins.

There’s now a 97% probability the Fed will lower rates by 0.25% at their October 29th meeting. The market has largely priced this in, but we’re hopeful it sets the stage for further mortgage rate improvements ahead.

My take: With the government shutdown, we’re flying blind on employment data. However, with Fed members acknowledging a weakening labor market, unemployment could rise quickly, which, fortunately or unfortunately, tends to help rates.

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Fed Chair Powell made an interesting comment yesterday about the Fed’s balance sheet. Over the past few years, the Fed has been reducing its holdings selling off assets instead of buying bonds, which has contributed to higher rates.

The Fed now appears to be signaling a shift, potentially resuming bond purchases to support liquidity, echoing the stimulus-driven strategies seen in 2020 and post-2008.

This shift should have a positive impact on rates, with the Fed potentially investing around $20 billion per month in Treasury purchases. Powell also signaled more confidence that the recent tariff-driven inflation is temporary.

My take: I’m already seeing more applications come across our desk, not just for refinances, but also for new purchases. Competition is heating up, so if you’re thinking about buying or refinancing, now’s the time to get started.

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