Weekly Mortgage Rate Update-07-09-2024

The case to be made for lower rates is increasing as almost all the recent data points to a slowing economy, but so far it hasn’t materialized.

Last week ISM Services showed a significant contraction. We are a service-based economy so this represents the majority of our economic output.

June payrolls as reported Friday shows 206k jobs added vs. estimates of 190k, but the prior two months were revised significantly lower, a pattern we are getting used to- higher initial reading, then revisions later.  May was revised from 272k jobs down to 218k and April from 165k down to 108k.  That is 111k jobs that were initially reported that did not actually exist. The non-farm payroll data released by the BLS each month is a survey of businesses and households. We continue to get more and more proof that this survey data we rely on to gauge the health of the job market is flawed.

As it stands now the 3 month rolling average is 177k jobs per month being added.  The job picture is still considered decent with the 3-month average staying above 150k, but it is trending lower. Unemployment increased in June from 4.0% to 4.1%. We have a fair number of jobs being added still, but the unemployment rate is rising because the amount of people looking for work is increasing.  Weekly jobless claims have been rising over the past few weeks as well, foretelling higher unemployment readings ahead.  

As California goes so goes the nation- California’s employment data was just audited and shows that while initially they had reported 300k jobs added between September 2022 and September 2023, that number is really only 50k.  For example, in July 2023 the initial data showed 9,900 jobs added for the month, after audit, 41,400 jobs were actually lost.  California has the highest unemployment rate in the nation at 5.2% . “I think California’s economy is the leading edge of the national economic slowdown,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University.  - https://apnews.com/article/california-highest-unemployment-slower-job-growth b1e4c822b33f29f819dbb024103cc843

This week is jam packed with data.  Most importantly CPI inflation reading on Thursday, Powell is before congress today and tomorrow, and we also get to see how much demand there is for our debt with several key bond auctions. The response in rate markets to the recent data has been muted and so far, not able to break out of our current trendline. We will see if the data this week has any impact on this.  

Loan Type	Conventional 30 year	Conventional 15 year	FHA 30 year	VA 30 Year
Interest rate	6.625%	5.875%	6.125%	6.125%
APR	6.78%*	6.13%*	6.86%**	6.26%***

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.