Home Contracts Rose as Fed Got Tougher

Fed signals meet stronger housing demand

If you plan to buy, refinance, or simply track your next payment move, today brings a real push and pull. The Fed kept its benchmark rate unchanged, but its outlook turned firmer, which can add pressure to mortgage rates over time. At the same time, lower tension in the Middle East helped oil prices fall and eased some market stress, giving rates a little relief today. Mortgage News Daily says its national rate index, a nationwide daily average, put the 30-year fixed national average at 6.58%. This is a published national average, not a live quote from a lender, and your actual rate can differ.

Why the Fed matters right now

• The Fed left short-term rates where they are, but its new outlook pointed to a greater chance of higher rates later this year (source: market analysis service MBS Highway).
• That update also showed officials now expect firmer inflation, which makes near-term rate cuts look less likely.
• For mortgage shoppers, that means today's small relief could face more pressure if inflation stays stubborn and the Fed keeps a tougher stance.

The Fed did not move today, but its message leaned toward higher borrowing costs ahead.

Why markets felt calmer today

• A signed Iran agreement reduced immediate worries in the region, according to Mortgage News Daily.
• The same market coverage said the waterway used for major oil shipping reopened and a 60-day ceasefire extension helped calm investors.
• Lower oil prices, reported below $74 a barrel, helped ease some of the upward pressure that had been building on mortgage rates.

Calmer global news gave borrowers a modest break, even as the bigger Fed outlook stayed more cautious.

The data did not follow the script

• Pending home sales climbed 3.8% in May, far above the 0.8% forecast, showing buyers were more active than expected (source: market analysis service MBS Highway).
• That report also marked a fourth straight monthly increase, with gains across every region.
• New unemployment filings fell by 4,000 to 226,000, while the number of people staying on benefits rose by 24,000 to 1.8 million, leaving the jobs picture steady but not simple.
• A rental-price measure showed annual rent growth at 1.4% in April, up from 1.3% before but still much lower than last year's 2.8% pace.

Housing demand came in stronger than expected, while job and rent data offered a mixed backdrop for future mortgage-rate moves.

Final Takeaway

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Homeseed Lending Team, powered by Barrett Financial Group, L.L.C., NMLS #181106. Licensed in AZ, CA, FL, NC, NV, OR, TX, WA. Equal Housing Opportunity. This article is for informational purposes only and does not constitute an offer to extend credit.