Mortgage rates are falling sharply, reaching their lowest levels since mid-September
Mortgage rates have been in a holding pattern for almost 3 weeks after the November 10 inflation data. In that single day, the 30-year average fixed rate fell by a record amount (as far as daily records are concerned, and we have no daily records prior to 2009). It took classes from the low 7's to the mid 6's in a few hours and that's where they stayed until morning.
The timing of today's improvement depends somewhat on the lender in question. Some lenders offered quite aggressive improvements yesterday. This was in response to a well-received speech by Fed Chairman Powell and stronger-than-expected bond buying as part of the month-end trading process (bond buying is good for interest rates, all other things being equal). These friendly events occurred late enough in the day that the average lender was unable to adjust their rates accordingly until morning.
All that needed to happen was for the bond market to hold relatively steady overnight. And it happened. The result is easily the best improvement day since November 10th, and one of the better days of 2022. The average borrower will see rates 0.25% lower than yesterday morning at the average lender (ie, 6.5% is now 6.25%).
Friday brings the important employment situation (the official jobs report from the Ministry of Labor). The Fed focuses primarily on inflation, but labor market data is not too far behind. If job creation comes in weaker—especially if wage growth declines—the Fed will increasingly conclude that it has less room to be aggressive in fighting inflation without doing serious damage to the economy. All other things being equal, this will make for another good day for rates.
Of course, the opposite is also possible (that is, if job growth surprises positively and wages accelerate, rates may recover slightly). The data will be published at 8:30 am, that is, before the mortgage lenders publish the rates of the day.
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