Mortgage Rates Eased Slightly This Week On Employment Data Revisions And Fed Minutes

“Mortgage rates eased slightly this week as data revisions showed past employment growth was weaker than previously thought,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans. “The latest Bureau of Labor Statistics Current Employment Statistics showed a 30% downward revision to employment gains in the 12-month period through March 2024. This was the largest revision since 2009. The minutes from the July Fed meeting showed the majority of the FOMC believed a September rate cut could be appropriate, thus validating traders’ expectations about the future path of the fed funds rate.

However, that forecast for fed rate cuts was already mostly priced into current mortgage rates, which means we may not see major changes to rates as a direct result. Prior to the latest data release, markets already anticipated three quarter point rate cuts before year’s end. Traders now anticipate the Fed funds rate settling in the 3.25-3.50% range by July 2025. 

The PCE data release next week will likely cause investors to reassess their growth forecasts and the path of Fed policy. While inflation is expected to keep moderating, any unexpected deviations from the current trajectory could trigger more mortgage rate volatility.”