Recently, there have been rapid changes in the mortgage rate landscape, leading to a noticeable difference in offerings from lenders. On average, top-tier conventional 30-year fixed rates have dropped by more than 3/8ths of a percent since Tuesday afternoon.
To put it in perspective, you'd have to go back to the days following the failure of Silicon Valley Bank in March to find a similar drop in rates within a 48-hour timeframe. This is quite remarkable and a bit unexpected, given the current economic data and events driving this rate movement.
While there are several reasons behind this rate movement, the bottom line is that if we had to guess how these events would impact rates without actually witnessing the rate drop, our guess would have been much smaller.
However, here's the important part: Friday's upcoming jobs report will play a crucial role in determining whether this rate improvement is sustainable. The bond market, which influences mortgage rates, has a history of reacting strongly to certain economic reports, and the jobs report is among the most influential. While the unemployment rate is straightforward to understand, it's the count of nonfarm payrolls (NFP) that carries the most weight.
Economists are predicting an NFP of 180,000. Sometimes, the consensus is close to reality, but other times, it can vary significantly by 100,000 or more. If the NFP falls significantly below 100,000, it's likely that the recent rate improvement will hold its ground or even improve further. Conversely, if the NFP approaches 300,000, much of the progress seen over the past two days could be reversed in a matter of minutes.
Of course, there are outcomes in between where rates may remain relatively stable. The one thing we can anticipate is that there's a high potential for volatility in the mortgage market based on the upcoming jobs report.
So, whether you're a prospective homebuyer or a homeowner considering a refinance, stay tuned for the report's release, as it could have an impact on your mortgage rates. It's always a good idea to keep an eye on the market and consider discussing your options with one of our mortgage professionals to make informed decisions in this ever-changing environment.
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