Uncertain Economic Data Pushes Mortgage Rates Lower
Markets remain volatile as concerns over economic slowdown and tariff uncertainties weigh on equities. The Nasdaq has been hit particularly hard, with many high-profile tech stocks trading lower. The rotation out of technology has significantly impacted stocks like Tesla, which has sharply declined. However, Tesla is not alone—many high-beta AI and technology stocks are undergoing a pricing adjustment. Given that the “Magnificent 7” were the primary drivers of equity appreciation over the past two years, their decline could substantially impact broader markets and consumer spending should they fall further.
The February Jobs Report indicated a slight slowdown in hiring amid rising economic uncertainty and government layoffs. Bond traders viewed the report as modestly positive, with the unemployment rate ticking up and earnings growth easing,
The Atlanta Fed’s GDP Now model projects a -2.4% slowdown, signaling potential economic contraction. In recent years, government and healthcare jobs have driven employment growth, but these sectors do not necessarily contribute to GDP expansion like private sector job creation does. As post-COVID recovery stabilizes and government stimulus fades, the likelihood of an economic downturn increases. While business confidence remains high, consumer concerns over the cost of living persist. Additionally, weak housing data is troubling, as home sales are a key driver of economic growth, supporting jobs and consumer spending.
The elevated uncertainty has pushed bond yields lower across the market, with the 10-year Treasury (the benchmark for most real estate loans) declining significantly. This has resulted in more favorable mortgage rates. Banks and credit unions continue to offer competitive pricing on both residential and commercial loans, except for office properties, which remain a challenging sector for lenders. Abundant private credit is also pushing bridge and other types of more temporary financing rates lower as competition for better quality deals heats up.
