Mortgage rates have seen a shift recently. After three weeks of decline, rates started climbing again as fresh employment data reflected a stronger job market.
In the week ending November 6, the average rate for a 30-year fixed mortgage increased by 17 basis points, reaching 6.18% APR, according to Zillow. Just for clarity, a basis point is one-hundredth of a percentage point. The Federal Reserve had cut the federal funds rate recently, but that led to a mix of expectations about their next moves.
With job growth in October, this could change how the Fed approaches inflation and employment. They often have three options during their meetings:
- Lower interest rates to stimulate job growth.
- Raise interest rates to combat inflation.
- Keep rates steady while analyzing new data.
The recent addition of 42,000 jobs points to a slight recovery, leading some to believe the Fed might shift their focus from unemployment to curbing inflation. Interestingly, despite claims from figures like President Trump that inflation is low, recent Treasury reports suggest inflation is still above the Fed’s target of 2%.
As for mortgage rates, they’re likely to rise further. The next Fed decision is a few weeks away, but signs indicate they won’t revert to the lows seen before October. Fed chair Jerome Powell made it clear a rate cut in December isn’t guaranteed, especially since the focus may pivot to managing inflation rather than fostering job growth.
For homebuyers, don’t lose hope. Typically, real estate activity slows down this time of year, which might give you bargaining power on home prices. Sellers eager to close deals before the new year could be more willing to negotiate, helping offset the effects of rising interest rates.
The landscape is evolving quickly—stay informed on how these changes might affect your choices in the housing market. For further insights, you can read more on inflation trends and their potential impacts on you from NerdWallet.
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