As you read this take a quick look around. Do you see a few things that were ‘Made in China’? On this day in 2001 China joined the World Trade Organization. Currently President Trump is working to resolve trade tensions which are helping to contribute to lower mortgage rates.
Home loan rates have benefited from recent weakness in the stock market. One of the major factors contributing to stock market weakness has been the lack of progress on trade talks with China.
There are reports that progress is being made but for now key differences remain. If and when the US and China reach a trade deal we may see the stock market rally which presumably would cause mortgage rates to rise.
Job growth declining
Last Friday’s all-important jobs report showed that 155,000 new jobs were created in the previous month. This was less than the 190,000 that were expected. The trailing three-month average has decreased to 170,000 which is the lowest of 2018. Some economists are predicting an economic slowdown for 2019-2020.
Ultimately inflation is the key driver of interest rates because if a lender forecasts that the purchasing power of money repaid in the future will be diminished they will charge a higher interest rate.
The Labor Department reported earlier today that prices at the wholesale level of the economy (Producer Price Index) increased by 2.7% last month when you strip away volatile food & energy. This is a modest increase from last month.
Tomorrow the Consumer Price Index will be released.
Mortgage rates are .375% better than they were a month ago. It appears to me that the rally lower has lost steam. I think the risks of mortgage rates reversing higher outweighs them improving so recommend locking.
Current Outlook: locking