Author: Eric BernsteinPublished:
Mortgage rates held steady this week, but the underlying data points to a market in flux. Buyers may be in for a late-summer surprise — and not just because of Fed decisions. Between shaky labor trends, political infighting, and Treasury market tailwinds, we could be heading toward more favorable rates in Q3.
The average rate on a 30-year fixed rate conventional loan fell to 6.813% - from 6.842% the week before.
But that's the AVERAGE (and only one loan program). Because LendFriend is a mortgage broker, we're able to offer great rates on a variety of loan products with no points! Make sure you're signed up for our weekly Friday rate texts. It saved one borrower almost $5,000 in unnecessary fees and interest. Another borrower was able to lock in a 6.375% with no fees just last Thursday on a conventional loan.
JOBS JOBS JOBS
The week kicked off with Job Openings trending higher - up to 7.4M up from 7.2M in March and much higher than the 7.1M expected. But the number of Americans quitting their jobs— a sign of confidence in their prospects — fell, and layoffs ticked higher.
Then, private payrolls only increased by 37,000 in May, well below the 60,000 in April and a complete disaster from the 110k expected. It prompted Trump to lash out at Powell on social media, blaming the bad report on high rates. Some notable lines included:
“Very Simple!!! He is costing our Country a fortune,”
“Borrowing costs should be MUCH LOWER!!!"
"Go for a full point, Rocket Fuel!”
I'm on board with that last statement - a completely unexpected full point reduction to the Fed funds rate would have a dramatic impact on lowering mortgage rates, but it's just not realistic to expect.
Finally the official Friday Job's Report showed 272,000 new jobs added - better than the 185,000 expected! It's A BIG beat for the second month in a row. The Jobs Report completely eliminated any concern for the labor market and pushed rates back up a bit. The unemployment rate stayed at 4.2%, but that's not the story for recent college grads.
In fact, the labor market for recent college grads looks grim... thanks to AI. College grads are currently facing an unemployment rate of 9.6%! While headlines have previously focused on automation threatening blue-collar roles, it appears AI is causing real shockwaves for white-collar entry-level jobs — especially for recent grads. New reports show:
Computer science majors have the highest unemployment rate of any recent college major at 7.9%, despite being the most in-demand just two years ago.
New grads are taking longer to find jobs, applying to hundreds of openings, and getting ghosted or beat out by AI. But interestingly enough, individuals at every experience level are reporting being ghosted by employers after multiple rounds of interviews
HR, marketing, finance, and programming roles are all being affected by automation, especially at the entry level.
X/Twitter vs Truth Social
I'm sure everyone has seen the highly publicized drama between Trump and Musk. The highly public feud between Donald Trump and Elon Musk this week is about more than the spending bill or Musk's government contracts. It’s a revealing clash over money, policy, and political leverage.
So what does this mean for markets — and for buyers?
In short: the markets are concerned about instability. If the falling out with these two has reverberating effects across the government, it raises questions for global investors about the long-term predictability of U.S. governance and capital markets - which ticks up the 10 year treasury yield and in turn forces mortgage rates higher.
The Treasury Wildcard
Here’s a big one you probably didn’t see on cable news: banks might soon get regulatory relief that could push Treasury demand higher.
Bloomberg reports that capital rules could be eased this summer, allowing banks to hold more Treasuries without extra capital buffers. That change — if implemented — could be massive.
More Treasury demand → Lower Treasury yields → Lower mortgage rates.
We may not need a Fed cut to see rates drop. A regulatory tweak could get us there faster — especially if paired with labor softness and global political noise.
Rate Cut Predictions
September 17th is still the firm target date (unfortunately). But who knows? Maybe Powell will listen to Trump on June 18th and cut rates a full point, but he definitely won't.
Make sure to follow us on Instagram for immediate reactions to all news. It's a big week for inflation news!
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