The Waiting Game Just Changed...But the Market isn't Cooperating
Last Friday, we finally got the kind of economic report we've been waiting for.
The jobs market showed a significant slowdown, with only 29,000 jobs added in September, unemployment ticking up to 4.2%, and another 60,000 jobs removed from previous estimates. Bureau of Labor Statistics
Normally, we'd expect news like that to help mortgage rates.
And initially, it did.
Then something interesting happened:
The bond market gave most of the improvement right back.
So if you're wondering:
“Wait… didn't you just tell me weaker jobs could be good for mortgage rates?”
Yes.
And they still can be.
But this week is giving us a great example of why one good economic report doesn't control mortgage rates by itself.
Here's what's happening, without the Wall Street jargon.
📰 What’s Happening
FIRST, THE GOOD NEWS: THE JOB MARKET IS DEFINITELY COOLING
Let's start with what hasn't changed since Friday.
The economy added only 29,000 jobs in September, dramatically below expectations.
July and August were revised down by another 60,000 jobs, and unemployment moved from 4.1% to 4.2%. Bureau of Labor Statistics
That matters because the Federal Reserve has been worried about an economy that remains too strong while inflation is still elevated.
A softer labor market gives the Fed another reason to be cautious about additional rate hikes.
Translation:
One of the major arguments for continuing to raise rates just became weaker.
That's good.
But there's another side to this story.
SO WHY HAVEN'T MORTGAGE RATES FALLEN?
This is the question your buyers are probably asking.
After Friday's weak jobs report, Treasury yields initially fell.
Then they reversed.
The 10-year Treasury actually finished Friday around 5.26%, despite briefly falling after the employment report. MarketWatch
In plain English:
The market heard the good news… and still wasn't convinced.
Why?
Because employment is only one thing investors are worried about.
Inflation remains elevated, global bond markets are volatile, and investors are still demanding relatively high returns to lend money for long periods of time. Axios
Translation:
We got one piece of the puzzle we wanted. We haven't gotten the whole picture yet.
THERE'S MORE MOVING MORTGAGE RATES THAN THE FED
This is probably the biggest consumer takeaway this week.
Everyone loves asking:
“What is the Fed going to do?”
But mortgage rates aren't controlled by one person sitting in Washington.
They're influenced by a massive global bond market.
What's happening overseas can matter too.
For example, Japan recently raised its policy rate to 1.25%, and movements in global currencies and bond markets can influence demand for U.S. Treasury securities. Bank of Japan
You don't need to understand the mechanics.
Here's what you need to know:
Mortgage rates can stay elevated even when U.S. economic data starts improving.
That's exactly why trying to predict the perfect day to buy based on one headline is so difficult.
THE SPEED OF THE RECENT RATE MOVE MATTERS
The 10-year Treasury has recently traded around levels not seen in quite some time, including reaching approximately 5.29%. Federal Reserve
And the move happened quickly.
That has created a lot of volatility in mortgage pricing.
But here's the distinction I want buyers to understand:
Volatility is not the same thing as permanence.
Today's rate environment could last.
Rates could move higher.
Or economic data could eventually create enough evidence for the bond market to reverse course.
Nobody knows that answer today.
Which is precisely why we don't want to build someone's entire housing strategy around predicting it.
WHAT THIS MEANS FOR YOUR CLIENTS
🏡BUYERS
If you were hoping Friday's weak jobs report would immediately send mortgage rates lower, the last few days have probably been frustrating.
But don't miss the bigger message.
The economic data underneath the rate market is changing.
Meanwhile, higher rates are keeping some buyers on the sidelines.
That can create something valuable:
Negotiating leverage.
Instead of only asking:
“When will rates come down?”
Ask:
“What can I negotiate while rates are keeping other buyers away?”
Seller credits.
Closing costs.
Rate buydowns.
Repairs.
Price.
Terms.
And if rates eventually improve, we can evaluate whether refinancing makes financial sense then.
🏷️ SELLERS
Buyers are extremely payment sensitive right now.
So before automatically reducing your price, consider whether those same dollars could be used more strategically.
A seller credit that helps reduce a buyer's financing costs may have a different impact on affordability than an equivalent price reduction.
Let us run both scenarios.
🔑 HOMEOWNERS
If you're waiting to refinance, don't let every daily rate movement change your plan.
Instead, determine:
What rate actually makes refinancing worthwhile for me?
If that number is 6.50%, 6.25%, or something else entirely, know it now.
Then you aren't watching the market emotionally.
You're waiting for your number.
THE KD TEAM TAKEAWAY: DON'T JUST SHOP THE RATE. SHOP THE DEAL.
This is the part I want buyers to understand.
When rates change, your strategy should change with them.
A lower-rate market might be about maximizing purchasing power.
A higher-rate market might be about maximizing negotiating power.
Neither automatically makes it a good or bad time to buy.
The question is:
What can today's market give you that a different market might not?
Right now, that could be leverage.
Less competition.
More motivated sellers.
Credits that help with closing costs.
Negotiating the rate instead of simply accepting it.
You can't control the market. But you can control how you structure the deal.
🎯 THIS WEEK’S KD TEAM PLAY: THE SIGNAL CHANGED. THE RATE HASN'T… YET.
This is the message I want buyers to walk away with this week.
Last week's jobs report did matter.
It showed us that the economy isn't as strong as previously thought and reduced some of the pressure for additional Fed tightening. Bureau of Labor Statistics
But markets don't move in straight lines.
Economic conditions can start changing before mortgage rates fully reflect that change.
Does that mean rates are definitely about to fall? Absolutely not.
It means buyers shouldn't confuse: “Rates haven't improved yet” with “Nothing is changing.”
Those are two very different things.
It's about finding out whether the deal can be.
Kaelen + Deanna | KD Team
SOURCE: MBS HIGHWAY | Barry Habib + Team, Morning Update