“What you hear on Main Street doesn’t show up in the jobs report,” St. Germain said. “Somehow, all of a sudden, we had a huge difference between the ADP report and the jobs report that came out. Those are huge numbers. And everything that I keep hearing about the Fed is that they’re very reactive. They’re never proactive. Everything that they’re doing is they keep waiting on employment to break.
“Every time you think employment is about to break, and we’re going to get some bad numbers, a report comes out, and it’s the complete reverse, and you have opposing data like that. It’s really hard for a market to understand and to go along with where they’re going.”
St. Germain believes that one of the biggest issues in the housing market is that everyone remembers how low rates were during the pandemic. He said the current rates, while still elevated, wouldn’t seem as bad if there hadn’t been a pandemic-induced depression in rates just five years ago.
“A really big issue regarding rates is about affordability,” he said. “We have a major crisis in affordability at the moment, and a big part of it is because we were teased with these rates from COVID. If we never had rates in the twos and low threes, you wouldn’t have had that to compare it to. I don’t remember anything (before COVID) below 4.5%. You know, 5%, 6% is a normal rate in the lending world.”
Fed action may not matter
Perlman said there are more factors impacting mortgage rates, and he thinks that, short of a major rate cut by the Fed, it may not matter what the central bank does in the short term.
