Mortgage rates eased slightly, decreasing by six basis points last week according to the Freddie Mac Primary Mortgage Market Survey as of July 2nd. With rates at a seven-week low and purchase demand continuing to edge higher, it’s an encouraging sign as prospective homebuyers respond to modest improvements in affordability.
Mortgage applications increased 0.04 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending June 26th. “Mortgage rates eased slightly last week as oil prices declined. As a result, mortgage applications increased modestly, with an uptick in purchase activity offsetting a smaller decline in refinances,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications remain ahead of 2025’s pace and have exhibited year-over-year growth for almost three months, as prospective homebuyers are finding opportunities in markets with ample inventory and easing home-price growth.
The U.S. economy saw job creation cool sharply heading into the summer, the Bureau of Labor Statistics reported Thursday. Nonfarm payrolls for June increased by a seasonally adjusted 57,000 for the month, slower than the downwardly revised 129,000 added in May. This was largely due to a slump in the labor force participation rate, which dropped 0.3 percentage point to 61.5%, the lowest since March 2021. “The slowdown in payroll growth challenges the narrative of renewed labor market strength that has been building in recent months but, importantly, reinforces the view that the Federal Reserve is under little pressure to tighten policy,” said Seema Shah, chief global strategist at Principal Asset Management.
Federal Reserve Chairman Kevin Warsh isn’t alone in arguing that central banks should stop trying to predict the economy. A slew of top central bankers said Wednesday they also questioned the practice of speculating about the economy’s future path. “We have found common cause,” Warsh said Wednesday. That was in response to ECB President Christine Lagarde, who said: “I have one regret, it’s to have felt bound and compelled by forward guidance.” Bank of England Governor Andrew Bailey and Bank of Canada Governor Tiff Macklem also said they oppose the practice. In central banking, “forward guidance” is when policymakers signal where interest rates may be headed in the spirit of transparency. But as Warsh has noted, that’s less useful in times of high uncertainty, when no one truly knows what will happen.
