Sovereign Lending Group prides ourselves on offering customer-centric service to our clients and a solid product line up at a very competitive price. Our dedication to service and products is well known and has been consistent over time. When November began, however, the focus was on price, as mortgage rates dropped in a very welcome move based on economic news that helped stocks and bonds. The financial community is hoping that the Federal Reserve’s efforts to slow inflation are working.

Stocks closed sharply higher during the first few days of November to extend a monster rally that saw the big three indexes sweep to their biggest weekly gains of the year, as investors grew more hopeful that the Federal Reserve’s interest rate hikes might have ended. The October jobs report Friday came in weaker than expected, showing the Fed’s campaign to cool the economy and stifle inflation could be indeed having an impact. 

Mortgage rates and bond yields (both part of the fixed income sector) during the first few days of the eleventh month with the 10-year Treasury yield sliding to 4.57 percent after touching 5 percent in recent weeks. The shorter-end more rate-sensitive 2-year yield was down 11 basis points to 4.86 percent. Among the top stock market benchmarks, the Dow Jones index rallied 5 percent for its best weekly showing since October 2022.

During Federal Reserve Chair Jerome Powell’s press conference on Wednesday after the Federal Open Market Committee meeting he observed, “We’re not confident that we haven’t, but we’re not confident that we have,” meaning that the central bank of the United States is still not sure whether it is done with a hiking cycle to “sufficiently bring down inflation to 2 percent over time.” Mortgage rates and bond yields dropped despite a Federal Open Market Committee that continues to “proceed carefully.”

As Sovereign’s management has noted many times in the past, the Federal Reserve does not directly set mortgage rates. The same factors that move financial markets, however, help set the wheels in motion at the Federal Reserve. And so, the fact that the Fed left rates alone suggests to the markets that what it has done is working, and that we may have seen the highs of interest rates.

The direction mortgage rates took to start the month was good news to anyone thinking about buying and financing a home. And when you combine this with Sovereign Lending Group’s products and service, well, it is time to take a look at the possibilities with one of our loan officers!