Market Commentary 6/4/21

Good But Not Great Jobs Report Pushes Mortgage Rates Lower

Interest rates rallied as the May jobs report was a good one but not quite what the forecasters predicted. Weekly unemployment data improved as the United States continues to recover from the pandemic. Fed commentary about the May jobs report reinforced that ultra-accommodative policy will keep pace until the Fed’s goal of full employment is met. The jobs report supports that thesis for the moment. The unemployment rate clocked in at 5.80% with still nearly 8 million jobs to fill.  

We have often commented that the Fed is encouraging inflation which is now making its way through the economy as both wages and goods have risen. It is hard to argue that wages are transitory as wage increases are sticky, but some goods and service price increases could fall as supply and demand rebalance, and for the moment the bond market and the Fed appear to be in agreement that inflation will not be a problem. Yet, CPI and other inflation readings indicated that costs have soared, a burden for everyday Americans. If inflation is feistier than expected, rates will move up quickly as a countermeasure. 

Traditional loan volume is ebbing as many borrowers have either purchased or refinanced their homes by now. However, alternative sources of real estate financing with attractive terms are helping borrowers who have complex financials, nuanced income, less than perfect credit, or other non-traditional circumstances. Insignia Mortgage continues to see strong demand for loans, especially in this niche area of the market. Finally, we continue to encourage former and current borrowers to take advantage of these very low rates because nothing lasts forever.