Your Money This Week

I wanted to kick off your money this week by looking at how far mortgage rates have come down, but I’d be remiss if I didn’t touch on this market volatility. 

Market Sell-Off

We had a big sell-off yesterday, and the market opened up down today. It happens, and this year has been notable for its lack of volatility. Ignore it and move on. You know the financial news media won’t, and in a quick headline scroll today we’re getting the framing that today’s job report was awful, the Fed messed up by not cutting rates, and would you believe it – the Sahm rule has been triggered?

For the record, I’d never heard of the Sahm rule until this morning, and no one knows if we’re going to have a recession or how the market will perform in the short-term. That includes the Fed. People can bash them all they want. Of course they don’t time things well. No one does. We’ll get rate cuts soon, and it may turn out that they were too late. Why Fed and market watchers expect it to be any different baffles me. 

While we’re on it, it looks like the market is now pricing in a 50 bps cut in September (and more beyond).

So, we’re not guessing about short-term moves with our money, but there is something potentially actionable to focus on, which takes me back to mortgage rates.

Mortgage Rates

Mortgage rates have come down a lot. Well, 10-year Treasury yields have come down a lot, and they’ve taken mortgage rates with them. Remember, mortgage rates are basically a function of the 10-year yield plus a spread.  

They’re at 6.4% now. 

This is from a high of just over 8% last year. 

Based on how mortgage rates are determined, I think long-term they should be in the 5’s. Anchoring to 2’s and 3’s is a mistake. We may have further down to go, but again, no one knows the timing and path. It makes sense to consider a refinance if today’s rate is attractive by comparison to where you were. Here’s how you can do the math.

If you’re trying to buy, home affordability is improving for you. 

In This Economy

Speaking of the economy, last week on the podcast we had an awesome guest, Kyla Scanlon, author of the book In This Economy – How Money and Markets Really Work.

I’d highly recommend reading it since it delivers well on its promise to “break down everything you need to know about how money and markets really work.”

We talked about how she believes that human behavior is the ultimate driver of the economy, misinformation is driving people to make poor decisions, her thoughts on today’s economy, the importance of financial education, and how she breaks down complex topics like the financial markets, inflation, the labor market, and the economy at large into understandable content to help people make better decisions.

In This Economy? How Money & Markets Really Work

Available through the link in title or wherever you get your podcasts