I. Agents and Loan Officers Have No Idea How Lucky They Are Right Now – Because the Economy Is So Weak! The 10-Year Treasury yield is over 4.7% - a level we saw in 2023 when inflation was raging. But – that yield would be far higher if there were not three very clear signs of economic weakness: The job market is very weak. The most recent nonfarm payroll report was negative, and we’ve lost about 1.5 million full-time jobs over the last year. Retail sales declined in July. This is serious because America is driven by consumption, and the retail sales numbers are not even adjusted for inflation. If they were, the numbers would be even worse. GDP growth is slowing. It fell from 2.1% in Q1 to 1.5% in Q2. The average mortgage rate is pushing 6.8% today, driven almost entirely by inflation concerns. This is a reminder, though, that the bond market (that controls long-term rates) reacts to both inflation concerns and growth expectations. The weak economic data discussed above signals slower growth, which is keeping rates far lower than they otherwise would be. In addition, if the spread between mortgage rates and the 10-Year were back at 2023 levels, the average mortgage rate would be close to 8%. Lucky indeed. Or at least a reminder that things can always be worse…Read More