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How Cheap Oil 🛢️ Can Lead to Lower Mortgage Rates

How Cheap Oil 🛢️ Can Lead to Lower Mortgage Rates

The US may find a path to lower mortgage rates through that black gold, the jobs data last week was mixed and we have a special REBEL 2025 surprise for those that scroll to the bottom!

Nick Steinhauer
February 10, 2025

Congrats to the Eagles for winning the big game last night 🦅🏈🏆

I didn’t have any skin in the game. I was most interested in the commercials, specifically the movie trailers. What a disappointment. Is there an original idea anymore?

One thing you can always bank on, Kreg and I deliver OUR OWN, unbiased commentary on the biggest events affecting the housing market week after week.

Let’s dive in!

**You might want to catch the Rebel announcement below**

We are posting regular content to Instagram (Nick | Kreg) and Facebook (Nick | Kreg) to help you and your buyers stay informed. Be sure to follow us!

Read time: ~5 minutes

Rates ended FLAT compared to last week, and volatility was LOW. Rates are in the low 7 range for most loan types without paying discount points. Paying discount points can get you in the mid to high 6's.

Jobs Data is Mixed 😕⬆️⬇️

On Tuesday, we saw the JOLTS (Job Openings and Labor Turnover Survey) report come in with a BIG 556,000 miss reporting 7.6 million jobs down from 8.156 million on the last report. This was the largest decline since October 2023.

On Wednesday, the ADP payrolls report added 183,000 jobs (exclusively in service provider positions), which beat forecasts of 176,000.

Then finally on Friday, we saw the big BLS jobs report which MISSED a 169,000 forecast landing at 143,000 new jobs. However, the unemployment rate moved lower for the second month in a row down to 4.0%.

Additionally, the November and December reports were revised HIGHER by a collective 100,000 jobs.

Mortgage rates improved earlier in the week only to give it all back on Friday.

Key Takeaway: The most recent round of jobs reports nullified any reason for the Fed to cut rates in the near future. We can expect the Fed to hold rates at the March meeting. To potentially get cuts in the back half of 2025, they will need to see a handful of bad jobs reports / persistent lower inflation. As of Sunday, markets are pricing in a 50% change of 1 or 2 rate cuts in 2025, which continues to fall.

How Cheap Oil 🛢️ Can Lead to Lower Mortgage Rates

Oil has been making some interesting moves much lower in the last 30 days. Why should folks in the housing industry care? Because it could mean lower rates in the future.

Lower oil prices result in lower costs for EVERYTHING. It’s used for gasoline, transportation and production of food, goods & services. As these get cheaper to produce, inflation starts to slow down.

Lower inflation can make long-term bonds more attractive to investors. Why? Because investors don’t need to demand high interest rates to protect against runaway inflation consuming their returns. Additionally, as we talk about all the time, the Fed is less likely to raise the short-term, which can pull long-term bond yields down improving mortgage rates.

Lastly, when inflation is lower, investor confidence is higher and they want to buy more long-term bonds. Demand is higher so the US Treasury doesn’t have to offer high interest rates to attract buyers. This pushes the yield down, which can bring mortgage rates down with it.

If the president and the US Treasury are looking to circumvent the Fed to influence mortgage rates, bringing down the price of oil may be the lever they pull.

Key Takeaway: ✅ Cheaper oil → ✅ Lower inflation → ✅ Lower bond yields → ✅ Lower long-term interest rates → ✅ Lower mortgage rates 🚀

A Couple Quick Hitters 👊👊

On Thursday, the CFPB agreed to put the medical collection debt rule on hold for 90 days. In March, the new rule was set to being prohibiting lenders from considering medical collections during review AND removing all medical collections from credit reports.
This Wednesday we get the first read on CPI that SHOULD show a pull back. Remember, for the next 3 months, we will be replacing some very large numbers from 2024 so the annual number is expected to go down.

Rebel week is upon us 🙌💪

The one and only Queen of Real Estate, Glennda Baker, will be gracing us with her presence here in central Ohio 👑

Her passion is leveling-up agents around the country with her love for real estate. She’ll be explaining how she leverages social media to educate and lead generate. Additionally, we will have a one-on-one Q&A with Glennda as part of the main event.

The event is SOLD OUT…

HOWEVER, there are just a handful of sponsor tickets that remain.

If you want in, e-mail us RIGHT NOW and we will try to get you in through one of the Rebel sponsors. First come, first served!