Mortgage rates showed some improvement this morning after weaker consumer spending gave markets some support.
Markets are watching inflation, employment, consumer spending, and the Fed for clues about where mortgage rates may head next.
This week’s inflation reports showed some improvement, while recent employment data continued to point to slower hiring. Today’s retail sales report was also weaker than expected, adding another sign that economic growth may be slowing.
Slower economic activity can sometimes help mortgage rates because it may ease inflation pressure and reduce the need for the Fed to raise the federal funds rate. The federal funds rate is different from mortgage rates, but Fed policy can still influence the overall direction of borrowing costs and financial markets.
What This Means
The latest reports have been supportive for mortgage rates. Inflation is still being watched closely, but softer price pressures and signs of slower growth have helped reduce concerns about additional Fed rate increases.
Looking Ahead
Next week, markets will focus on housing, employment, and the Fed. The Fed Minutes may get the most attention because they could provide more insight into how officials are viewing inflation, the economy, and future interest-rate decisions.
Miguel Terrazas
Mortgage Planner/Planificador Hipotecario // NMLS #227518
