There was yet another twist in the ongoing conflict in the Middle East today.
Renewed hope of a deal after President Trump said, “Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran.”
That was yesterday afternoon though, and his latest Truth Social post carried a much different tone.
In it, he said, “If they don’t agree [to terms], the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before.”
Simply put, it sounds like hopes of an end to the war are once again super tenuous at best.
As such, the drop in mortgage rates today might not be warranted nor lasting.
Mortgage Rates Drop on Possible End to the War
If you’re wondering why mortgage rates are lower today, it’s because there were new whispers about an end to the war.
Sound familiar? Probably. Because this isn’t the first time it’s happened, only to be a head fake at best.
So what happened this time, Well, the “White House believes it’s getting close to an agreement with Iran,” per a so-called exclusive from Axios.
Of course, in the same exclusive article, they said “it may be hard to forge consensus across the different factions.”
And that “U.S. officials remain skeptical that even an initial deal will be reached.”
In other words, it sounds like more of the same back and forth rhetoric we’ve been hearing for weeks if not months now.
And it’s always flanked by new threats to ratchet things up even higher if a deal isn’t reached.
So for the bond market to rally today on lower oil prices, all tied to a potentially flimsy report seems questionable at best.
Yes, I want resolution like everyone else, but to think we wake up one day and all is agreed to while threats are being hurled seems silly.
So if you’re watching mortgage rates closely, perhaps take today as a gift, but be warned they could easily turn higher again.
Jobs Comes In Hotter Than Expected Too!
The other head-scratcher here is that the ADP jobs report released today came in above expectations.
A total of 109,000 new jobs were created in April, well above the median forecast of 84,000 jobs and nearly double the 61,000 from a month earlier.
In addition, it was the biggest monthly gain for jobs in 15 months, signaling strength in the labor market.
If we assume labor is holding up better than expected and inflation is rising again, in part due to the war in Iran and oil prices, that would put a lot of upward pressure on mortgage rates.
While I’m not totally convinced on the strength of the labor market, another hot jobs report on Friday would surely push mortgage rates higher.
And really any strength there right now coupled with renewed inflation concerns should realistically push mortgage rates higher.
So again, take the win today if you’re locking a mortgage rate, but be super cautious if you’re thinking rates might get better and are floating your rate.
Things can change fast and for me at least, there’s still more upward pressure than downward pressure.
Sure, rates could ease more, but there appears to be more room to run higher than lower right now. And rates are always quick to rise and slow to fall!
Keep going: Use my mortgage rate calculator to quickly compare rates an .125% or .25% apart.
