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.
Rates Drift Higher as Fed Chair Signals Patience
Rates have crept up over the past month, now sitting around 6.54-6.69% depending on the survey. Not a dramatic move, but a steady grind higher since the sub-6% dip we saw back in April. Here’s the quick rundown of what’s driving things.
Jobs: Another Soft One
July’s jobs report caught everyone off guard – and not in a good way. The economy actually LOST 23,000 jobs when economists expected a gain of 83,000. Unemployment ticked down to 4.1%, but that’s mostly because people left the workforce, not because more people got hired.
Government employment took the biggest hit, down 53,000 – though economists think this may partly reverse next month due to seasonal quirks in local education hiring. Leisure and hospitality also lost 40,000 jobs. On the bright side, private payrolls did add 30,000, with healthcare and construction leading gains.
The real story is in the revisions: May and June were revised down by a combined 103,000. The three-month average has fallen to just 20,000 jobs per month – well below the pace needed to keep up with population growth.
Wage growth also cooled sharply, down to 3.2% annually – the lowest since May 2021.
The Fed: Holding Steady, For Now
The Fed met July 28-29 and held rates at 3.5-3.75%, but the vote wasn’t unanimous – 9-3, with three members wanting to raise rates. Several Fed officials have publicly floated a September hike if inflation doesn’t cooperate.
The weak July jobs report actually cooled some of that hike talk. When the labor market looks this soft, it’s harder to justify raising rates. So we’re back to a wait-and-see Fed, watching the data as closely as we are.
Inflation: Steady, Not Spiraling
July’s CPI report came in right at expectations – still elevated, but no nasty surprise. That’s actually decent news. It won’t change the minds of Fed members who already want a hike, but it won’t push the wait-and-see crowd toward one either.
Inflation has been slowing gradually since April. The question is whether it slows enough to hit the Fed’s target without any help from higher rates.
The Iran Wildcard Continues
The war remains the geopolitical variable nobody can predict. Fighting flared again in the Strait of Hormuz in mid-July, sending oil prices jumping before settling back down. Every time the conflict escalates, rates tend to inch higher along with Treasury yields. Every time it quiets down, we get a bit of relief. This tug-of-war looks likely to continue.
What This Means for Borrowers
Where We Stand:
At 6.5-6.7%, rates are higher than the sub-6% lows from April but still well below last year’s highs. The MBA and Fannie Mae both expect rates to hold in the 6.4-6.5% range through year-end.
The Fed Is Genuinely Split:
With policymakers divided between hiking and holding, don’t expect a clear signal anytime soon. The next Fed meeting is September 15-16, and this weak jobs data probably takes a hike off the table for now.
Bottom Line:
Rates are stable-ish in the mid-6% range with real disagreement inside the Fed about what comes next. If your numbers work today, that’s still a reasonable place to move forward – nobody’s calling for a return to sub-6% anytime soon.
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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