Each month, we bring you insights from one of the best in the business — Zack Diener of Barrett Financial Group, LLC — to help you stay informed and make confident, well-timed decisions in today’s ever-changing mortgage landscape.
Meet the New Boss: Rates Climb as Fed Turns Hawkish
Sorry for going quiet in June – let’s catch you up, because a lot happened. The headline: we now have a new Fed Chair, and he’s not the rate-cutting savior some hoped for. Today, rates sit at 6.49-6.55% according to Freddie Mac and Mortgage News Daily – meaningfully higher than the sub-6% levels we briefly touched back in April.
New Fed Chair, New Direction
Kevin Warsh officially took over as Fed Chair and held his first meeting on June 17th. Markets expected a smooth transition. Instead, they got a surprise: the Fed’s “dot plot” flipped from projecting a rate cut to signaling a possible hike, with nine of 18 officials now penciling in at least one increase before year-end.
The Fed held rates steady at 3.5-3.75% (as expected), but the messaging shifted hard. They raised their inflation forecast to 3.6% for the year – way up from March’s 2.7% – and simply removed the language suggesting future rate cuts were likely.
Translation: the “will they cut soon” conversation is officially dead for now. Markets have swung all the way from expecting relief to bracing for a possible hike.
Jobs: Slow and Getting Slower
June’s jobs report didn’t help the case for cuts, but it also wasn’t the kind of strength that justifies hikes. The economy added just 57,000 jobs – well below expectations and the slowest pace since February. Unemployment ticked down to 4.2%, but only because people left the workforce, not because more people found jobs.
Wage growth remains stuck at 3.5% annually – well below inflation, meaning workers are losing purchasing power for a third straight month.
The bigger picture: hiring has basically stalled. Not collapsing, not booming – just flat. That’s part of why the Fed feels comfortable staying hawkish on inflation instead of worrying about jobs.
The War Flares Back Up
Just when things seemed to calm down, fighting between the U.S. and Iran resumed in the Strait of Hormuz. Oil prices have been whipsawing – dropping back toward pre-war levels in late June before spiking again this month on renewed strikes. Brent crude jumped over 9% in a single day earlier this week as the U.S. and Iran traded attacks near the strait.
This continues to be the wildcard driving both inflation and rate volatility. Every time it looks like things are settling down, another flare-up sends oil – and rates – back up.
What This Means for Borrowers
The New Reality:
Rates in the 6.5% range are frustrating after flirting with 6% in April, but this is where we are. With the Fed pivoting hawkish and inflation still elevated, don’t expect relief soon. The MBA (Mortgage Banker Association) and Fannie Mae both see rates holding around 6.4-6.5% through year-end.
Don’t Wait for a Fed Rescue:
The rate-cut hopes that many were pricing in have essentially evaporated. If anything, markets are now nervously watching for a hike. That’s a real shift from where we were even two months ago.
Historical Perspective Still Holds:
Yes, 6.5% stings. But remember: rates topped 7% in early 2025 and hit 8% in 2023. If you’re above 7% now, refinancing still makes sense.
Bottom Line:
Between a new, hawkish Fed and an unpredictable war still disrupting oil markets, expect rates to stay choppy in the mid-6% range for now. If your numbers work today, don’t wait around for a rescue that may not come.
Mortgage insights provided by
Zack Diener – Senior Mortgage Broker
Barrett Financial Group LLC
NMLS 470413 / 181106
808-349-3777
zdiener@barrettfinancial.com
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