Mortgage Rate News

July was the month the Fed held the line, but only barely. We started the month at 6.50 to 6.52 percent, still digesting June’s repricing. The Fed met July 28 and 29 and held steady again at 3.5 to 3.75 percent. But three members, Beth Hammack, Neel Kashkari, and Lorie Logan, dissented in favor of a hike. That’s not noise. That’s three sitting officials on record saying rates should be higher right now. Inflation cooled slightly to 3.5 percent year over year in June, down from the multi year high the month before, but it’s still nowhere near target, and Chair Warsh’s committee said plainly that inflation remains elevated relative to their 2 percent goal. Oil gave the market some whiplash too. Crude dropped nearly 5 percent late in the month after Iran strike plans were paused, but Iran hit U.S. bases in Kuwait and Bahrain days earlier, and shipping traffic through the Bab el Mandeb is still getting rerouted around Houthi threats. That’s not resolution, that’s a pause. Treasury yields stayed jumpy through all of it, and by July 30 the 30 year fixed printed at 6.66 percent, the highest close of the summer. Fannie Mae and MBA are both still projecting rates hold in the mid 6 percent range with no real relief before 2027. Here’s what this means for T&T’s exit strategy: stop speculating on rate drops. Your end buyer at 6.66 percent has less buying power than at 6.5, and a lot less than at 6.0. Your construction loan at 10.5 to 11.5 percent APR is bleeding you every month the project sits. If you’re banking on rates dropping to move inventory faster, you’re getting crushed by carry costs, and July just proved the Fed isn’t in a hurry to bail you out, three of its own members want to go the other direction. The play now is locked pre sales before dirt moves. Get the buyer committed and rate locked while you build, not hoping they show up at the end when rates haven’t budged. That’s the only exit strategy that works in this environment.

Written by Hammerhead Capital Inc