What’s Happening?
All news below is color-coded as “good“, “bad“, or “neutral” for mortgage rates.
•Next Fed Rate Cut (good for rates): The Fed meets next Wednesday on Dec 10th, and the Fed Futures Market is pricing in an 87% likelihood that the Fed will cut rates. As usual, mortgage rate markets are already pricing in that cut, which means the cut next week is unlikely to impact mortgage rates at all.
•Jobs Report (good for rates): Last week we received 2 jobs reports: the current one for November, and the one we missed for October when the Government was shutdown. October missed big, LOSING 105,000 jobs, but November showed more new jobs than expected; 64,000 vs 45,000 expected. Those numbers don’t net out and coupled with the spiking unemployment market (below), this adds downward pressure to mortgage rates.
•Unemployment Metric (good for rates): The unemployment number, up yet again now the 4th month in a row. It increased from 4.4% to 4.6%. At the end of 2024, unemployment was at 4.1%. The labor market seems to be seriously slowing down and that opens the door a bit wider for sooner-than-expected Fed rate cuts in 2026. 2 weeks ago, markets expected no more cuts until MAYBE April, now, a cut in March is in play.
•Inflation Report (good for rates): The November CPI (Consumer Price Index) Report shows the rate of inflation slowing; down from 3% to 2.7%. This, coupled with the rising unemployment, is all fuel for mortgage rates to continue to fall as the economy slows.
