Friday was a big day. 💥

We got a weaker-than-expected jobs report and investors sold stocks and bought bonds - pushing interest rates way down.

This report has the markets sure that a recession is around the corner and that the Fed will have to more aggressively cut rates.

Here's how big of a move it was:

For reference, we use the rate on the 10-Year Treasury (10YR) as an indicator for what mortgage rates are doing. The two move together up and down.

The 10YR is updated live while mortgage rates typically get updated at the end of each day.

Before we get too far, here's my general takeaway after having the weekend to marinate on everything:

There are a lot of people jumping to conclusions. 🏃‍♂️‍➡️

This week, the rate on the 10YR fell just ~10%; putting us at a 31-week low.

The average 30-year conventional rate went from 6.7% to 6.4%.

How often does this type of move happen? Not very often. 🤯

I had to go back to the end of February 2022 to find a bigger drop (-12%).

More recently, we saw a similar decline back in December 2023 (-7.5%).

Moments like these can create a lot of fear because usually it's bad economic news driving it. 🫣

You'll likely see headlines about a recession, stock market crash, war in the middle east, and on and on.

Quite frankly, my brain knee-jerked to wondering how bad things really are when I watched the market move. 🧠

The important point: Your clients are probably feeling nervous especially given a relatively big decline in stocks recently. 

In fact, the popular technology stocks (Nasdaq 100) are down nearly 7% in the past month.

That's a big drop for people just getting on the AI train after feeling the FOMO..😫

Finding Opportunity

For everybody's sake, let's take a step back, breathe, and look at the big picture. 🖼️

This could be something. Or it could be nothing.

Big drops in interest rates might be celebrated by home buyers and agents, but usually it's not a great sign for the economy. 🤷‍♂️

It's typically a signal that investors are seeking safety instead of risk. Safety from economic challenges, that is.

The truth is, it's too early to tell if this move is really significant.

Ignore the scary headlines. 😱

If you're keeping up, you'll know things rarely are as good or bad as they seem. 

Back in February of 2022 when rates fell big, they immediately reversed course and continued rising. 📉📈

The reversal didn't happen as quickly in December 2023, but a few weeks later, rates turned around and marched back to the highs. 📉📈

I'm not saying for sure this drop will be short-lived, but I think there's plenty of precedent that suggests we won't keep going down forever.

We've got a lot of year left with all sorts of crazy stuff that can still happen. Speed bumps ahead! 

Change creates opportunity.

It's a little ironic that right when the rules from the NAR lawsuit are about to go into effect, rates are dropping and likely to create a surge in activity. 😅

✅ Keep your focus on adding value to your people.

Regularly update them on the opportunity in front of us: more affordability and options than we've seen all year. 💡

Plenty of houses have been sitting, doing big price reductions, and are ripe for the picking before sellers start to play hardball if rates fall further.

All of this chaos will generate opportunities to those who are looking.

Ask yourself "where is the opportunity here?" 🤫

We can't predict the future and this may not last.

It's easy to get excited and let the idea that rates will keep falling creep in your head. 😬

Don't lie - you've already had visions of 3% again...🍾

But markets don't move in straight lines and usually big moves are followed by some moderation. ☯️

This article does a nice job showing the flip side of the worse-than-expected jobs report.

Rather than trying to time the market at the absolute bottom, we need to get with our clients to determine what payment they need to meet their goals, the rate that gets them there, and act when the time comes.

You've got this. Get excited for the opportunity ahead of us and make it a great start to August!

And If you want some help, I'm here. 🚀 

Dr. Alex Stewart
Founder

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