We’re at the last week of July and more than half way through 2023 and not only have mortgage rates not gone down but have risen to levels that no one predicted. The supposed experts who have been predicting an economic slow down or recession are wrong, once again. Orion’s management feels it is important for our broker clients to know what has been happening with rates and be able to tell your borrowers about it.

Predicting anything is difficult, as it is part luck, guess work, and scientific estimation. Neither Orion nor our successful brokers don’t base business on predicting interest rates. When it comes to the bond markets, and therefore mortgage rates, given the number of variables and global “moving pieces” that have an impact on the rates shown to borrowers, it is virtually impossible. The U.S. economy has been much stronger and more resilient than expected. Strong economies foster higher rates, slow economies lower rates, and the U.S. Federal Reserve does what it can to avoid either extreme.

This week the Federal Reserve Open Market Committee meets again and won’t meet again until September. The Fed raised its policy rate band for a 10th straight time in May, by a quarter point to 5%-5.25%. The FOMC decided on no change in June, to assess the impact that higher rates were having on the economy and banking system but forecast two additional increases this year.

Orion’s brokers know that the U.S. economy is based on housing and jobs. On the housing front, homebuyer affordability has eroded for several months as prospective buyers continue to grapple with high interest rates (30-year rates are morethan double what they were two years ago) and low housing inventory. We’re seeing a scarcity in existing housing supply, strong seasonal demand, and demographic trends supporting further market strength. The national median home price remains nearly 40 percent higher than it was three years ago.

In terms of jobs, the most recent numbers which were announced July 7th showed that the U.S. labor market added 209,000 jobs in June, while the unemployment rate ticked down to 3.6 percent. No one told the job market about an impending recession as employers continue to add a healthy number of new jobs, helping keep the economy on a solid footing. High demand for workers usually fuels stronger wage growth and, in turn, inflation.

Economic data has all but extinguished doubt about a Fed interest-rate increase this week. Going forward, the economy is in good shape if you go by the jobs and housing figures, though inflation is still stubbornly high. It is hoped that inflation will moderate in a way that will take pressure off the Fed. Economic data will be important to track, as always, to see if the economy remains as strong as it was in the first quarter.

Like the weather, the economy will do what the economy will do. The best Orion and our AEs can do is to continue to offer great products and service regardless of the direction of interest rates. No one can determine the direction of the bond market, but we can prepare for changes in direction or make our business immune from interest rate movements by focusing on the Orion products and service that our valued brokers require to help your clients.