Mortgage rates are unchanged from last week. The financial markets were closed yesterday for Columbus Day.
Friday’s all-important jobs report came in at +156,000 new jobs which was just shy of expectations. Also embedded in the jobs report was data that showed year-over-year average hourly wages increasing by 2.6% which is nearly the highest increase in seven years.
Why is this important? If companies have to continually raise workers’ wages at some point they will need to raise the price of the good or service they are selling to compensate. Higher prices leads to inflation which is the nemesis of mortgage rates.
Decent job growth coupled with strong wage gains leads me to believe the Fed will hike rates at the December meeting. The Fed does not directly set mortgage rates and the last time the Fed hiked rates mortgage rates feel afterwards. Will history repeat itself? It could.
If the markets think that additional interest rate hikes could threaten the economic expansion and/ or suppress inflationary pressure we could see mortgage rates fall even as the Fed hikes short-term interest rates.
Current Outlook: neutral