Mortgage rates have a long and storied history of making big moves on the day that the big monthly jobs report comes out.  In that regard, today was fairly normal.  Indeed, the jobs report came out and mortgage rates made their biggest move of the week, dropping to the lowest levels since April 2023. The biggest catch in today's case was the fact that much of the market movement came in response to comments from several Fed officials who weighed in on the prospects for the rate cut in a week and a half.  Granted, the jobs report influenced those comments, but they were ultimately reduced to votes for a 0.25% vs a 0.50% rate cut (the Fed is cutting either way).  To be fair, the Fed comments had a bigger impact on parts of the market that don't directly correlate with mortgage rates.  That was a victory for us today.  Rates would have been higher otherwise.   If this seems slightly confusing, it's important to remember that the Fed Funds Rate does not move hand in hand with mortgage rates.  Mortgage rates move well in advance of the Fed because mortgage rates are tied to the real-time bond market whereas the Fed only updates rates 8 times per year.  Moreover, the Fed Funds Rate applies to the shortest time frames (<24 hours) whereas the average mortgage lasts around 5 years.  The takeaway is that you should NOT expect mortgage rates to improve after the Fed cuts rates.  Mortgage rates have ALREADY improved in anticipation of the rate cut.  

Wouldn't it be nice if you could know what was going to happen with mortgage rates before it actually happened?  Since the dawn of time in financial markets, there's someone who's willing to make a seemingly compelling prediction about the future for every person who's willing to believe such things are better than 50/50 guesses.  When it comes to time frames as short as 24 hours, it's a 100% coin flip. Reason being: Friday's direction will be determined by the outcome of the Employment Situation (aka, the jobs report)--the single most important scheduled economic report on any given month.  This installment is particularly important because it's in a unique position to influence the Federal Reserve's decision on the size of the rate cut that will be announced in 2 weeks. Financial markets have long since adjusted to the expected outcome of the jobs report.  In other words, if jobs come in at or around 160k payrolls, that's not actionable news even though it would constitute a big improvement over last month's 114k.  It's the scenarios where the payroll count is less than 100k or more than 200k where the market is more likely to go a bit wild. Under 100k would likely result in another meaningful move toward even lower rates than today's (already the lowest since April 2023).  Over 200k would mean a quick return to the recent range.  For better or worse, it's not out of the realm of possibility to see rates move by 0.1 to 0.2%.  Contrast that to the average change over the past 2 weeks of less than 0.05%. The report will be released at 8:30am ET which is well before mortgage lenders set their rates for the day.

Mortgage rates moved lower for the 2nd straight day on Wednesday with the average lender right in line with their lowest levels since August 5th.  In fact, most borrowers would see little--if any difference between today's loans quotes and those from August 5th.  As such, today's rates basically match the lowest in well over a year. This is made possible by a series of economic reports that have "played nice" with the notion of the Fed cutting rates by at least 0.25% at the next meeting in 2 weeks.  The bond market (which includes bonds that drive daily changes in mortgage rates) is constantly adjusting to get in position for the Fed's most likely course of action.  By the time the Fed actually cuts, most of the mortgage rate movement associated with that cut will have already happened. If economic data is important in determining the near-term momentum, the next two days are critical.  Tomorrow's combination of Jobless Claims and the ISM Services index will set the tone early, but it will ultimately be Friday's big jobs report that provides the best chance for clarity on the Fed's rate cut plans.   Weaker jobs data would increase the odds of a 0.50% rate cut, and mortgage rates would drop in anticipation.  Conversely, a stronger-than-expected jobs report would solidify the case for a 0.25% cut, likely pushing mortgage rates a bit higher in the interim. There's no way to know which direction things will go in the coming days, only that there is greater potential for the move to be bigger than those seen in recent days. 

You never know what you're going to get on the days surrounding a 3 day weekend for financial markets, and that's doubly true when it corresponds with the final/first trading day of the month.  Despite all of those potential curveballs, the bond market stayed calm enough for mortgage rates to do the same.  Friday took rates slightly higher, but that modest move has been erased at the start of the new week/month. Each of the next 3 days contains important economic data with the power to impact rates.  The most important report of the week (and the month, for that matter) is Friday's Employment Situation (aka "the jobs report").  This report is especially important as it has a chance to bolster or refute the case made by the previous report (the one that was much weaker than expected, thus resulting in sharply lower rates). In general, stronger data will put upward pressure on rates and vice versa.  

Day to day movement has been subdued in mortgage rates recently, and now the week over week movement is just as uneventful.  Friday's average top tier 30yr fixed rate almost perfectly matched last Friday's and it was identical to where we began the week.   Given the absence of any major market moving motivations, this isn't a surprising turn of events.  That said, it's worth considering that the past 3 days have seen gradual upward pressure implied by the bond market.  This didn't immediately translate to upward pressure in mortgage rates due to the timing of the market movement relative to when mortgage lenders set rates for the day.   Whether or not this ends up looking like a vague warning sign depends on the economic data in the coming week.  Unlike the present example, there are important data points each day with the most important report of them all--the jobs report--on Friday.  If there's a strong bias toward strength or weakness in the data, it will go a long way toward resolving the debate over the size of the Fed's rate cut in 3 weeks.  The rate cut itself has no bearing on mortgage rates, but shifts in rate cut expectations tend to produce comparable shifts in mortgage rates in the run up to the Fed's official announcement.