Rates remain unchanged despite market volatility

Happy Friday from Local Mortgage!

Several good days offset by one bad will leave rates right about where they ended last week, still right at 6.25% for our very best 30-year fixed Conventional scenario.

Markets improved on optimism surrounding a potential agreement in the Middle East, pushing oil prices down to their lowest levels since March and reducing inflation concerns. The momentum lower was mostly captured late last week but the rally continued modestly Monday and Tuesday.

All progress, however, was quickly erased Wednesday following the Fed announcement and press conference. As expected, rates remained unchanged, but the real news was the growing prediction that rates will increase by the end of the year. The famous dot plot map now shows that the average Fed member believes the Fed Funds rate will be at least 0.25% higher by the end of 2026.

Because the Fed Funds Rate governs ultra-short-term transactions (24hrs or less), it has the biggest impact on short-term debt. While short-term debt continued to take a beating Thursday, longer term debt like 30-year mortgages recovered a good bit of Wednesday’s losses.

Looking ahead, attention will remain fixed on the conflict in the Middle East and the proposed deal to ease tensions. Investors also will monitor comments from Fed officials about future monetary policy. For economic data, New Home Sales will come out on Wednesday. Personal Income and the PCE price index, the inflation indicator favored by the Fed, will be released on Thursday.

Hope everyone has a great Father’s Day weekend, thank you for reading.