Mortgage Market Update – April 8th, 2024

Insights and Analysis: Mortgage and Real Estate Capital Markets Update with Jeff Rosato, SVP of Capital Markets at Nationwide Mortgage Bankers

Welcome back, everyone! Let’s dive into this week’s insights on major bond market indices, Federal Reserve activities, upcoming economic data releases, and overall bond market trends.

Market Overview

This week, we anticipate fresh inflation data with the Consumer Price Index (CPI) scheduled for Wednesday and the Producer Price Index (PPI) on Thursday. Stronger-than-expected headline numbers may delay interest rate cuts, potentially pushing expectations for the first cut to the end of July.

Despite mortgage rates edging up close to their highest levels of the year, last week marked another robust week for lock volume. We averaged 17 locks per day with a total of 84 for $34M. However, overall April locked volume is currently down compared to March. The Freddie Mac average 30-year fixed rate sits at 6.82%, up from 6.79% the prior week.

“Treasury yields and mortgage rates have seen gradual increases over the past weeks, reflecting a relatively strong economy with persistent inflation.”

Nonfarm payrolls outperformed expectations last Friday, with 303k jobs added in March and the unemployment rate ticking down slightly to 3.8%. These factors indicate a resilient job market, likely influencing the Federal Reserve’s decision-making regarding rate cuts.

Economic Outlook

Although inflation is showing signs of decline, it remains elevated above the Fed’s target of 2%. With robust economic data and job numbers, the Fed is justified in delaying rate cuts until summer. The Fed aims to gain “greater confidence” that inflation is moving sustainably towards their target 2% level before considering rate adjustments.

As of today, rates continue to rise following Friday’s strong employment report, with MBS prices down and the 10-year Treasury up sharply to 4.44%.

Have a fantastic week ahead, and stay tuned for more updates!

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