Another FED rate cut doesn't do much for mortgage rates

Happy Friday from Local Mortgage!

It was an eventful week for mortgage markets with several mixed signals for the direction of mortgage rates. For the week, mortgage rates moved up just slightly as we end the week at 6.000% for our very best 30-year fixed conventional scenario.

Tuesday’s JOLTS report was a mixed bag of news as it showed job openings jumped to 7.7 million which is the highest level since May, however the “quits” rate fell to the lowest level since August of 2022 which helped balance out the effect of the higher job openings.   

And the trend of mixed signals continued Wednesday, as the FED followed through with their 3^rd 25-basis point rate cut of 2025, a move that was widely expected. However, markets bounced around during Chairman Powell’s speech as investors tried to read between the lines. The Chairman said that “the FED is well-positioned to wait to see how the economy evolves” - a comment not seen as favorable for rates – but he also said that current rates are at the high end of neutral and that recent job gains were overstated – comments that were seen as more friendly for future rate cuts.  

One of the most influential pieces of data from this FED meeting was the quarterly Dot Plot chart which shows anonymous projections of the future federal funds rate by each of the 19 members of the Federal Open Market Committee. This quarter’s Dot Plot chart was very similar to last quarters, showing that Fed Officials predict only one rate cut in 2026 and one more in 2027. This continues to be one of the main reasons why long-term rates have not reacted to these last three rate cuts.

Looking ahead, markets will continue to react to the influence of economic data that is slowly coming back online. Tuesday will be a big day next week as we are scheduled to get key employment data and retail sales and Thursday will bring inflation data with the Consumer Price Index.

Hope everyone has a great weekend and thank you for reading!