How Mortgage Rates Are Influenced By The Economy

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Anyone who is in the market to buy or sell a home in the near future is likely following mortgage rate trends and wonder what lies ahead. One thing that can affect mortgage rates is the Federal Funds Rate which influences how much it costs banks to borrow from one another. While the Fed doesn’t directly control mortgage rates directly, they do control the Federal Funds Rate.

The relationship between the two is why people have been closely watching to see when the Fed might lower the Federal Funds Rate. Whenever they do, that’ll put downward pressure on mortgage rates shortly thereafter. When the Fed meets, three of the most important metrics they’ll look at as they make their decision include the rate of inflation, how many jobs the economy is adding and the unemployment rate. Here is some information on the three topics.

Rate of Inflation
Inflation has been in the news quite often over the past year or two and everyone has likely felt it whenever they go to purchase just about anything. That’s because high inflation means prices have been increasing quickly. The Fed has stated that its goal is to get the rate of inflation back down to 2%. Right now, it still remains higher than that, but is progressing in the right direction.

How Many New Jobs
The Fed is also tracking how many new jobs are created every month. They want to see job growth slow down consistently before taking any action on the Federal Funds Rate. If fewer jobs are added, it means the economy is still strong but cooling a bit which is their goal. That looks to be exactly what is transpiring now. Inman says: “. . . the Bureau of Labor Statistics reported that employers added fewer jobs in April and May than previously thought and that hiring by private companies was sluggish in June.” So, while employers are still adding jobs, they’re not adding as many as they were before. That’s an indicator the economy is slowing down after being very overheated for quite some time and is an encouraging trend for the Fed to see.

Unemployment Rate
The unemployment rate is the percentage of people who would like to work but cannot get a job. A low rate means a lot of Americans are employed so that’s a good thing for many people. However, it can also lead to higher inflation because more people working means more people spending which can drive up prices. Nowadays the unemployment rate is low, but it’s been rising slowly over the past few months. While it may sound harsh, a consistently rising unemployment rate is something the Fed needs to see before deciding to cut the Federal Funds Rate. That’s because a higher unemployment rate would mean reduced spending, and that would help get inflation back under control.

Ultimately some recent economic data may signal that hope is nearing for mortgage rates. Count on a local real estate agent you can trust such as myself to keep you up to date on the latest trends and what they mean for you.

Beth Dickerson

Boston, MA

Primary phone
(617) 510-8565
Email
[email protected]
Address
277 Dartmouth St. , 2nd Floor,
Boston, MA 02116

About The Author

One of Boston’s most reputable real estate brokers, Beth Dickerson has achieved more than $2 billion in sales and thousands of successful real estate transactions over her nearly thirty-year tenure. Beth has received national acclaim from the real estate industry and represents some of the most prestigious residents and properties across Massachusetts. Her enduring record as a top producer comes from the intuitive gift of sensing her clients’ needs. She has built a business that is referral-based at its core—a testament to her relationship-driven approach and penchant for exceeding expectations. It is this nuanced expertise that Beth leverages to guide many of her clients-turned-friends through some of the greatest milestones of their lives.

Beth was the proprietor of her own real estate company before joining the residential division of R. M. Bradley in 1993, where she was a top producer for more than a decade. In 2003, she founded her own boutique real estate firm, Dickerson Real Estate, before merging with Gibson Sotheby’s International Realty in 2007. Today, Beth attributes her success to her comprehensive marketing and advertising strategies, exclusive contact network, and unparalleled insight into neighborhoods like Back Bay, Beacon Hill, the South End and Waterfront. With an understanding that no two clients are alike, she works with clients in all phases of life—from first-time buyers to luxury developers, seasoned sellers and beyond. Beth offers clients the resources to aggressively market their property locally, nationally and globally, and her attention to detail, drive and enthusiasm are unmatched.

Beth has appeared in prestigious media outlets including The Wall Street Journal, Mansion Global, The Boston Globe, and Boston magazine, and was prominently featured as Greater Boston’s real estate expert on WCVB Chronicle in 2020. She has had the honor of serving as President of the Downtown Council of the Greater Boston Real Estate Board. For over ten years, she has been a Co-Chair and Committee Member for the Massachusetts General Pediatric Hospital for Children’s Storybook Ball. She serves as a Board Member of the Community Music Center of Boston and a member for the Perkins School for the Blind, Emerald Necklace Park Conservancy, Justine Liff Luncheon, Youth Villages and the Boys & Girls Club of Boston, among dozens of other organizations throughout the Boston area.

A long-time resident of Boston’s Back Bay, Beth was an active member of the community as she raised her two children: she served as treasurer of the Clarendon Street Playground and was an avid supporter of the Hill House Community Center.