Mortgage rates crept slightly higher this week, holding out in the lower 4% threshold. Markets are treading water so to speak as they brace for ripples from the Fed and the April jobs report.
It’s the Fed Week
The Federal Open Market Committee (FOMC) will meet this Wednesday and everyone’s eager to hear of developments or changes to its economic outlook. Will the Fed signal its second rate hike this week?
What’s for sure is the Core PCE (Personal Consumption Expenditures) which measures inflation fell at 1.83% in March and was below the Fed’s targeted rate of 2%.
The Fed’s decision to raise its benchmark interest rate usually hinges on the inflation rate and the employment situation.
Update: In its statement on May 4, the FOMC said it will stick to gradual adjustments in light of the slowing economic growth last first quarter. There is no rate hike for now but analysts are betting on one in June.
There’s the April Jobs Report
On Friday, May 5, the Bureau of Labor Statistics will release the employment report for the month of April.
The important jobs report is expected to reflect 180,000 new jobs created last month, according to Mortgage Market Guide (MMG).
Back in March, the employment situation was 180,000 jobs short of the 235,000 touted in February, which was later revised to 219,000.
Where Rates Currently Stand
In anticipation of this week’s events, experts at MMG advised to float rates in the meantime and consider locking (i) right before any Fed announcement or (ii) ahead of the April jobs report.
Floating provides a leeway should mortgage rates drop further while locking rates prevents volatility in mortgage rates should they go higher in response to the above financial events.
Take a look at today’s mortgage rates (May 1 vs April 28):
- 30-year fixed-rate mortgage: 4.03%, up from 3.97%.
- 15-year fixed-rate mortgages: 3.27%, up from 3.23%.
Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.