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Welcome news for mortgage brokers, and somewhat surprising
While welcome news given her role as a mortgage broke,. Rebecca Richardson, of UMortgage, wasn’t completely taken off guard by the development. Still, she added, the lowered rates only added to the contradictory market reports amid today’s uncertain market.
“It was somewhat expected after the resolution of the debt ceiling standoff but also a bit surprising following positive job numbers,” she told Mortgage Professional America. “Extra ‘black swan’ margin was built into pricing in case it didn’t get resolved and I suspect traders are shedding some of that and positioning for next week’s Fed meeting.”
Republicans were pitted against Democrats over raising the debt ceiling on the nation’s $26 trillion economy, with the former threatening to vote against expanding the cap until concessions were made. Both parties came to an agreement last weekend, preventing what would have been the nation’s first default on its debts since it was formed – a scenario universally viewed as catastrophic should it have occurred.
The jobs report to which Richardson referred came from the US Bureau of Labor Statistics, showing 339,000 jobs were created in May – far exceeding expectations by nearly double the anticipated amount.
Mortgage rate drop gives buyers hope
Notwithstanding the emergence of data seemingly in contradiction with each other against a backdrop of uncertainty, the dip in mortgage rates does have a buoying effect, Richardson said. “It puts some wind in the sails of buyers and helps abate their fears,” she said. “It also means it stokes demand in light of historically low inventory. It means we have a 2021 high demand market but with 2023 rates, which lower affordability. It’s a tough dynamic for buyers, for sure.”
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