Homebuilder ETFs Find Strength as Mortgage Rates Slip

“Mortgage rates ticked lower this week as trade negotiations sparked stock market fluctuations and caused investors to flock to the certainty of Treasuries,” Danielle Hale, chief economist at Realtor.com, told The Washington Post. “Looking forward, as markets interpret [Federal Reserve] Chairman [Jerome] Powell’s speech last week as an indicator of fewer rate hikes than previously expected, mortgage rates are likely to see less upward pressure to adjust ahead of anticipated hikes.”

However, Hale warned that the upcoming Friday employment report could affect mortgage rates ahead as market watchers will be closely watching the Federal Reserve’s reaction on U.S. economy.

“While a low reading on job or wage gains is ordinarily interpreted as bad news for the economy, at this stage in the cycle, a lower reading would suggest that the Fed is relatively closer to neutral and may not need to hike as much as otherwise expected,” Hale added. “A strong reading on jobs or wage gains could lead bond rates, including mortgage rates, to spike higher as investors expect a data-dependent Fed to continue gradual rate hikes.”

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