Hi Reader,

The average 30-year fixed mortgage rate ended the week at 6.63%, down slightly from 6.64% the prior week, according to Mortgage News Daily. Freddie Mac reported 6.55%, up from 6.49% the week before.

Relative calm, despite an uptick in geopolitical heat

Despite renewed turmoil and conflict in the Middle East, this week illustrated just how many different factors the bond market is weighing at once.

Early in the week, Treasury yields moved lower after both consumer and producer inflation came in softer than expected. Lower inflation readings reduced concerns that prices were accelerating and temporarily lowered expectations that the Federal Reserve would need to raise interest rates again this year.

However, those improvements were offset later in the week by stronger-than-expected economic data.

​Jobless claims unexpectedly fell, indicating employers continue to hold onto workers. The Philadelphia Fed manufacturing index came in well above expectations, reinforcing the idea that the economy remains resilient. At the same time, Dallas Fed President Lorie Logan reiterated that the Federal Reserve should continue focusing on elevated inflation, which pushed Treasury yields higher.

By Friday, Treasury yields eased again as investors digested the week's mixed economic data. Housing starts came in stronger than expected, import prices cooled, and consumer sentiment was expected to improve modestly.

Takeaways

The Fed is mostly concerned about inflation. The softer inflation readings released this week largely reflected June data, when crude oil prices had fallen from about $96 per barrel on June 1 to roughly $69 by the end of the month.

What's happening now is that crude went from $70 a barrel on July 1st to $82 as of this morning. So now we have a resurgence of higher oil prices, which historically has driven inflation up.

What does oil have to do with mortgage rates?

Oil matters because it can influence mortgage rates in two ways. Higher oil prices can push up inflation expectations, causing 10-year Treasury yields, which mortgage rates tend to follow, to rise. They can also make the Federal Reserve more likely to keep interest rates higher for longer to prevent inflation from becoming entrenched.

The question is: is the Fed counting on the war ending to soothe inflation alone without a rate hike? This would be logical, however we cannot predict geopolitical events.

Real Estate News

The latest housing data shows affordability continues to be the biggest challenge for buyers.

​Pending home sales fell 5.4% in June compared with May and were down 0.3% from a year ago, as higher mortgage rates and record-high home prices kept some buyers sidelined.

At the same time, homebuilders continue working to attract buyers. More builders reduced prices in July, and nearly two-thirds are still offering incentives to help offset today's affordability challenges.

One encouraging note for our area: while pending sales declined nationally, the Northeast posted a 2.2% increase compared with last year, showing this region continues to hold up better than many parts of the country.

New Co-op rules go into effect

If you work with NYC buyers, there's an important change taking effect July 28.

A new New York City law will require most co-op boards to respond to complete purchase applications within specific timeframes. While boards will still decide whether to approve or deny applicants, the new deadlines are intended to make the process more transparent and reduce the long periods of uncertainty that buyers and agents have often experienced.

Since co-ops are sometimes a good value for first time home buyers, I support co-op buyers as one of my specialties. I put together a quick reel explaining what the new law means and how it could affect your buyers:

Whether your client is purchasing a condo or navigating a complex co-op purchase, I'm always happy to help them understand the financing, prepare for the board process, and get to the closing table as smoothly as possible.

I hope your week is off to a great start!

-Nicole

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Nicole Hamilton Bernheimer | NMLS #2354049

nicole@homeownering.com, 917-650-0167

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