We’re more than halfway 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 slowdown or recession are wrong, once again. Sovereign Lending Group’s management feels it is important for our clients to know what has been happening with rates.

Predicting anything is difficult, as it is part luck, guesswork, and scientific estimation. SLG doesn’t base our 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.

We remind our clients 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 more than 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 Sovereign Lending Group’s loan officers 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 Sovereign products and service that our clients require.