Weekly Mortgage Rates Fall as Hiring Stalls

"This year, mortgage rates have been pushed and pulled in opposite directions by two economic forces. Inflation has pushed mortgage rates upward, while unsteady job creation has pulled rates lower. They fought to a draw for the first seven months of the year. But the outlook has changed since the beginning of August. A slowdown in hiring has been at the top of policymakers' minds, and mortgage rates have fallen."

"'The labor market is weak,' said Christopher Waller, a Federal Reserve governor, in an Oct. 10 interview on CNBC's 'Squawk Box' program. He implied that the slump in hiring could translate into Fed rate cuts. Waller is on the Fed's rate-setting committee, so his words sway markets. So do the utterances of the Fed's chair, Jerome Powell, who said in an Oct. 14 speech in Philadelphia, 'In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen.'"

"The central bank cuts the overnight federal funds rate when the economy sheds jobs. Lower interest rates are designed to stimulate more hiring. They do that by encouraging businesses and consumers to borrow money. The Fed lowered the federal funds rate in September. Investors overwhelmingly expect the Fed to reduce it again at its next meeting, Oct. 28-29, and again at the Dec. 9-10 meeting."

Mortgage rates fell for the third consecutive week, with the average 30-year fixed-rate mortgage declining 14 basis points to 6.11% APR in the week ending Oct. 16. Three weeks earlier the average stood at 6.35%. Inflation has pushed mortgage rates upward while weak job creation has pulled them lower, offsetting each other through much of the year. Since early August a slowdown in hiring has weighed on markets and helped push mortgage rates down. Federal Reserve officials noted a softer labor market, and the Fed cut the federal funds rate in September; investors expect additional rate reductions at upcoming Fed meetings.

Read at SFGATE