Portland Mortgage Market Update — October 4, 2024

Oof, it was a rough week for rates. There was a lot going on, both "planned" and "unplanned", which I will detail below, but all in all we saw rates worsen to the mid to high 6's. Hopefully next week proves to be kinder to us with the CPI report on Thursday and a bunch Fed members speaking through the first part of the week.

By "planned" and "unplanned" I mean occurrences that can't be planned on happening (unplanned) and recurring economic report or Fed members having scheduled meetings (planned). The week opened with the impending dockworkers strike, which if prolonged, would cause a scarcity of goods that would result in higher inflation. THEN, there was the escalating threat of war in the middle east and with Iran being the world's 7th largest oil producer there is concern about spiking oil prices, also bad for inflation. Both of these are obviously outside of the Fed's purview so I am going to file them in the "unplanned" category.

At the same time, jobs week came and bit us right in the backside. Every jobs report this week came in hotter than expected, and before the first report dropped Fed Chair Powell spoke and was very positive about the strength of the economy. This was a pretty stark difference from his previous tone after the last Fed cut, and while I am sure he has access to some detail of the reports before they drop it is seeming more and more likely that he is guiding the markets by "greasing the skids" before we get the economic data. Both the threat of higher inflation and strong jobs reports were bad for mortgage rates, but we are still way better than where we were a couple of months ago.

While this week was bad, it is not the end of the world. Rates do not move in a straight line, and the trajectory for mortgage rates over the next 18 months is firmly pointing downward. This is a temporary setback and the market is still betting 95% that we see another rate cut in November and 80% that we get another still in December.