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Mortgage Rates Fairly Steady, But Volatility Could Increase

After a sharp increase to start the year and significant improvements between April and mid July, mortgage rates have been fairly flat for more than a month.  That’s definitely not a bad thing considering how close they are to all-time lows with best-case 30yr fixed scenarios still under 3.0%.

Change is coming though, for better or worse.  Rates could actually move lower, but not for reasons that we’d like to see.  Any significant move lower in rate would require a deterioration of “the outlook”–a term that’s intentionally ambiguous here as it encompasses the outlooks for covid, the economy, and Fed policy.

It will take time to get a clearer read on the covid outlook given the inception of a new school year.  It will therefore also take time to understand how economic momentum is affected by the covid outlook.  If that’s not already enough interdependence, there’s the issue of potential labor market shifts due to the new school year (the theory is that a meaningful number of workers may return to the labor force as their children are back to in-person school for the first time in more than a year).  And of course those labor market dominoes depend on schools remaining open despite covid spreading at a record pace in some states.

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