Portland Mortgage Market Update — January 10, 2025

OUCH. It was jobs week this week culminating in today's BLS report for December, and it came in much stronger than anticipated. This was brutal for mortgage rates. Rates are based on the 10 yr Treasury Yield, which jumped over a ceiling of resistance (4.735) that had been previously suppressing it. Now there is no technical barrier for the yield to jump up to the 5.0 mark which it hasn't reached since October of 2023. 30 yr rates in the 8% range may be in our near future for a little bit.

How does the Jobs report impact the Treasury Yield? It all comes back to the Fed's dual mandate. They need to keep inflation down and the labor market strong. Last month they announced they are planning on cutting rates only twice this year vs the 4 times they had initially proposed. With this stronger Jobs report, the market is now betting they will only cut once this year. Stocks fell as a result (since the higher rates mean higher costs for businesses) and money that would have been invested in the stock market is being routed to Treasuries, pushing them higher.

Progress is never a straight line, though. I still stand by my forecast that I sent out earlier this week. This will be a temporary setback and rates will improve from this in the coming months. In the meantime, we need to make sure we are all reaching out to our clients to remind them that despite higher interest rates, home prices are still going to increase this year and it is still a fantastic time to buy.

Finally, I would be remiss if I didn't comment on the fires in LA right now. Please consider reaching out and donating to an organization like the Red Cross <https://www.redcross.org/donate/donation.html/> or California Fire Fund <https://cpf.salsalabs.org/cff-donation/index.html> to help those families and first responders that have been impacted by the destruction.