Mortgage rates have often made big moves on the first Friday of each month. That is the day the monthly jobs reports comes out each month. This report is looked at very closely by economists and the Federal Reserve. It is an indicator of inflation and the overall health of the economy. In that regard, today’s job report was fairly normal. The $144,000 new jobs was about what was expected. Mortgage rates got a bit better today, about 1/8%. But it wasn’t because of the jobs number. It was because of the Fed officials talking about if they will cut rates later this month at their meeting on September 17 and 18. They were ultimately reduced to votes for a 0.25% vs a 0.50% rate cut (the Fed is cutting either way).
If this seems slightly confusing, it’s important to remember that the Fed Funds Rate does not move hand in hand with mortgage rates. Mortgage rates move well in advance of the Fed because mortgage rates are tied to the bond market, that moves every day. The Fed only updates rates 8 times per year. Also, the Fed Funds Rate is a rate that is only applicable for the shortest of loan terms, whereas the average mortgage lasts around 5 years.
The takeaway is that you SHOULD NOT expect mortgage rates to improve after the Fed cuts rates on Sept 17 and 18. Mortgage rates have already improved in anticipation of the rate cut.
