{"id":174175,"date":"2024-06-17T13:33:34","date_gmt":"2024-06-17T19:33:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=174175"},"modified":"2024-08-03T08:56:45","modified_gmt":"2024-08-03T14:56:45","slug":"2024-dscr-loan-rates-and-how-to-track","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2024-dscr-loan-rates-and-how-to-track","title":{"rendered":"What Are Current DSCR Loan Rates? Key Market Movers and How to Track Rates"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC4707335603\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><em>This article is presented by<\/em>&nbsp;<em><a href=\"https:\/\/www.easystreetcap.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Easy Street Capital<\/a>. Read our&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/editorial-blog-guidelines\" target=\"_blank\" rel=\"noreferrer noopener\">editorial guidelines<\/a>&nbsp;for more information.<\/em><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">After a decade of relative stability in mortgage rates, the last few years have seen unprecedented volatility and changes in mortgage rates. Interest rates are often a key concern for real estate investors, as mortgages are often the difference between a cash-flowing deal and a dud.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Since spring 2022, when the Federal Reserve embarked on its latest rate-hiking cycle, interest rates on the most popular loans for real estate investors, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.easystreetcap.com\/dscr-loans-guide\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">DSCR loans<\/span><\/a><span data-preserver-spaces=\"true\"> (part of the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nerdwallet.com\/article\/mortgages\/article-non-qm-loans\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">non-QM loans<\/span><\/a><span data-preserver-spaces=\"true\"> category), have moved at unprecedented rates. Many months of rates moving at most a few basis points a week morphed into dramatic, massive movements\u2014with bigger changes sometimes happening in one day than had occurred in quarters or years prior.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Real estate investors navigating the challenging market of 2024\u2014with mortgage rates still at elevated levels\u2014are at an advantage when they can lock in financing terms or plan purchases while DSCR loan rates are favorable. But figuring out what to look for and what moves mortgage markets can be challenging.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">We\u2019ll help pull back the curtain <\/span><span data-preserver-spaces=\"true\">a bit<\/span><span data-preserver-spaces=\"true\"> on the biggest drivers of mortgage rates<\/span><span data-preserver-spaces=\"true\">, as well as<\/span><span data-preserver-spaces=\"true\"> how investors can watch the market like a financial expert does.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Bond Market Concepts:<\/span><span data-preserver-spaces=\"true\"> What Determines Mortgage Rates?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">In the United States in 2024, mortgage rates are generally tied to the overall bond market, as most residential mortgages, including conventional qualifying mortgages for owner-occupants, residential investment mortgages (DSCR loans), and even other alternative residential mortgages (non-QM), are <\/span><em><span data-preserver-spaces=\"true\">securitized<\/span><\/em><span data-preserver-spaces=\"true\">. <\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> means they are bundled <\/span><span data-preserver-spaces=\"true\">together<\/span><span data-preserver-spaces=\"true\"> and turned into bonds, financial instruments that pay out interest (yield) to investors looking for a steady, fixed return. These investors are typically large financial institutions looking for safe, predictable returns, such as pension funds, insurance companies, and banks.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Key concepts <\/span><span data-preserver-spaces=\"true\">to understand<\/span><span data-preserver-spaces=\"true\"> in economics and finance are risk and reward. Risk should be <\/span><span data-preserver-spaces=\"true\">thought of neither as<\/span><span data-preserver-spaces=\"true\"> good nor bad<\/span><span data-preserver-spaces=\"true\">, but rather<\/span><span data-preserver-spaces=\"true\"> always in relation to the associated reward or returns.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For example, a 10% return (or reward) can be worth the risk if you are investing in a Class A single-family rental in a great market with an A+ tenant, but not worth the risk at all if betting on a 16-seed to make it to the Final Four in March Madness.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Investors in mortgage bonds utilize the risk-and-reward framework when allocating how to invest capital. Mortgage bonds have multiple alternatives they weigh against. As such, one of the biggest drivers of mortgage rates are other options investors have for returns.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">When people refer to the Federal Reserve \u201csetting rates,\u201d they mean the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.investopedia.com\/terms\/f\/federalfundsrate.asp\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">effective federal funds rate<\/span><\/a><span data-preserver-spaces=\"true\"> or the rate at which banks charge other institutions <\/span><span data-preserver-spaces=\"true\">on an overnight basis<\/span><span data-preserver-spaces=\"true\">. Since banks can earn this yield with essentially zero risk, other alternatives (with risk) would need to provide higher returns. <\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is why when the Fed hikes or cuts rates, it affects all <\/span><span data-preserver-spaces=\"true\">other<\/span> <span data-preserver-spaces=\"true\">sorts of<\/span><span data-preserver-spaces=\"true\"> financial instruments.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">However, the <\/span><span data-preserver-spaces=\"true\">main<\/span><span data-preserver-spaces=\"true\"> benchmark for bonds, including mortgage bonds, is U.S. Treasury bonds, <\/span><span data-preserver-spaces=\"true\">which are<\/span><span data-preserver-spaces=\"true\"> issued by the United States federal government.<\/span> <span data-preserver-spaces=\"true\">While the <\/span><span data-preserver-spaces=\"true\">current fiscal trajectory of the country<\/span><span data-preserver-spaces=\"true\"> certainly has some issues, this is generally referred to in finance as the \u201crisk-free\u201d rat<\/span><span data-preserver-spaces=\"true\">e\u2014<\/span><span data-preserver-spaces=\"true\">a<\/span><span data-preserver-spaces=\"true\">nd<\/span><span data-preserver-spaces=\"true\"> the main economic alternative to mortgage bonds.<\/span><span data-preserver-spaces=\"true\">&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">One key insight is that conventional mortgage bonds (mortgage-backed securities, or MBS) <\/span><span data-preserver-spaces=\"true\">made up of<\/span><span data-preserver-spaces=\"true\"> government-sponsored enterprise<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bankrate.com\/real-estate\/gse-government-sponsored-enterprise\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> (GSE<\/span><span data-preserver-spaces=\"true\">)-backed<\/span><span data-preserver-spaces=\"true\"> mortgages<\/span><\/a><span data-preserver-spaces=\"true\"> are benchmarked with the United States 10-year Treasury bond, while MBS <\/span><span data-preserver-spaces=\"true\">made up of<\/span><span data-preserver-spaces=\"true\"> non-QM mortgage loans (including the all-important ones for real estate investors, DSCR loans) are benchmarked with the United States five-year Treasury bond.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These mortgage bonds trade with a spread<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">or higher <\/span><span data-preserver-spaces=\"true\">amount of<\/span><span data-preserver-spaces=\"true\"> rate\/return needed<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">versus the Treasury bonds to account for the higher risks.<\/span><span data-preserver-spaces=\"true\"> Investing in mortgage notes backed by homeowner and real estate investor borrowers is riskier for investors than notes <\/span><span data-preserver-spaces=\"true\">backed<\/span><span data-preserver-spaces=\"true\"> by the U.S. federal government. Generally, the spread to account for the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/newslink.mba.org\/mba-newslinks\/2024\/may\/mba-chart-of-the-week-30-year-fixed-mortgage-rate-and-10-year-treasury-yield\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">higher risk has historically been around 170 basis points<\/span><\/a><span data-preserver-spaces=\"true\"> (or 1.7%); however, in the last few years, this has ballooned to around 300 basis points (or 3%) amidst lots of volatility.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Without delving too much deeper into the math and financial fixed-income calculations, mortgage bonds generally have yields or returns based on the <\/span><span data-preserver-spaces=\"true\">main<\/span><span data-preserver-spaces=\"true\"> alternative for note investors, which are U.S. Treasury bonds. When bonds <\/span><span data-preserver-spaces=\"true\">are sold<\/span><span data-preserver-spaces=\"true\">, these yields go up, meaning investors demand higher returns for the risk. When bonds <\/span><span data-preserver-spaces=\"true\">are bought<\/span><span data-preserver-spaces=\"true\">, yields go down, meaning investors are OK with lower returns.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> means mortgage lenders will generally move their mortgage rates up and down based on corresponding movements in the Treasury bond market. <\/span><span data-preserver-spaces=\"true\">And the<\/span><span data-preserver-spaces=\"true\"> biggest drivers for changes in yields in Treasury bonds are economic data that <\/span><span data-preserver-spaces=\"true\">informs<\/span><span data-preserver-spaces=\"true\"> investors\u2019 guesses about future decisions by the Federal Reserve to increase or lower the ultimate benchmark rate: the effective federal funds rate.<\/span><span data-preserver-spaces=\"true\">&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For DSCR loan interest rates, this generally means tracking movements in five-year Treasury bonds (this is the best investor alternative for DSCR loans since the average duration a borrower holds a DSCR loan before selling or refinancing is around five years).<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Note on Numbers vs. Expected Numbers<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Before diving into the <\/span><span data-preserver-spaces=\"true\">main<\/span><span data-preserver-spaces=\"true\"> financial data pieces to follow that move yields, a final, <\/span><span data-preserver-spaces=\"true\">very important<\/span> <span data-preserver-spaces=\"true\">financial<\/span><span data-preserver-spaces=\"true\"> concept <\/span><span data-preserver-spaces=\"true\">to cover<\/span><span data-preserver-spaces=\"true\"> is how the markets interpret data. The <\/span><span data-preserver-spaces=\"true\">key<\/span><span data-preserver-spaces=\"true\"> point is that data <\/span><span data-preserver-spaces=\"true\">is typically interpreted<\/span><span data-preserver-spaces=\"true\"> as compared to expectations rather than month-over-month or year-over-year numbers.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Typically, banks, funds, and traders will have an expectation or estimate on <\/span><span data-preserver-spaces=\"true\">key<\/span><span data-preserver-spaces=\"true\"> economic data releases, often created through sophisticated, complex financial models. As such, when a number comes in, the most important thing to consider is how it compares to what it <\/span><span data-preserver-spaces=\"true\">was expected<\/span> <span data-preserver-spaces=\"true\">to be<\/span><span data-preserver-spaces=\"true\"> by the market rather than anything else.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is why there can be muted market responses to actual Fed rate hikes, as the central bank often telegraphs its intentions ahead of time, to the point where the change <\/span><span data-preserver-spaces=\"true\">is fully expected<\/span><span data-preserver-spaces=\"true\">\/estimated and thus \u201cpriced in\u201d ahead of time.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Key Economic Data Releases that Move Mortgage Rates<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Here are the <\/span><span data-preserver-spaces=\"true\">key<\/span><span data-preserver-spaces=\"true\"> economic data releases that most affect Treasury yields and mortgage rates; understand these and plug them into your calendar, and you will be a mortgage rate magician in no time.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Consumer Price Index (CPI)<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">For even casual interest rate watchers, it should <\/span><span data-preserver-spaces=\"true\">come as<\/span><span data-preserver-spaces=\"true\"> no surprise that the monthly Consumer Price Index (CPI) release is <\/span><span data-preserver-spaces=\"true\">key<\/span><span data-preserver-spaces=\"true\"> to interest rate movements. CPI measures general inflation for consumers for major individual expenses such as food, gas, shelter, and other basics. A key driver of Fed interest rate policy is to fight the recent<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.foxbusiness.com\/economy\/inflation-up-20-percent-since-biden-took-office\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> elevated inflation <\/span><span data-preserver-spaces=\"true\">that has been<\/span><span data-preserver-spaces=\"true\"> plaguing the country since 2021<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">CPI is released by the<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bls.gov\/news.release\/cpi.htm\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> U.S. Bureau of Labor Statistics<\/span><\/a><span data-preserver-spaces=\"true\"> (BLS) once a month (usually around the midpoint of the following month) at 8:30 <\/span><span data-preserver-spaces=\"true\">a.m.<\/span><span data-preserver-spaces=\"true\"> ET. The \u201cheadline\u201d number or main number typically seen in media reports<\/span><span data-preserver-spaces=\"true\">, <\/span><span data-preserver-spaces=\"true\">is the percentage change in inflation versus the prior year. So, for example, a release of an \u201call items index\u201d rise of<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bls.gov\/news.release\/cpi.nr0.htm\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> 3.4% for April 2024<\/span><\/a><span data-preserver-spaces=\"true\"> means that prices rose by 3.4% <\/span><span data-preserver-spaces=\"true\">when compared to prices in<\/span><span data-preserver-spaces=\"true\"> April 2023.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Remember that while the overall number is important and comparisons to the prior year and prior month are key, the main factor that affects interest rates (and thus, mortgage rates) is the number (percent change year over year) <\/span><em><span data-preserver-spaces=\"true\">versus expectations<\/span><\/em><span data-preserver-spaces=\"true\">. The expectation, in this case, is typically a median number from the models of the major banks.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Here is<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/x.com\/zerohedge\/status\/1679093712754712579\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> an example<\/span><\/a><span data-preserver-spaces=\"true\"> of the structure of expectations for a CPI release (sometimes called \u201cprint\u201d). CPI coming in above estimates generally means that mortgage rates will rise (as this will cause the Federal Reserve to lean toward higher interest rates to fight inflation <\/span><span data-preserver-spaces=\"true\">that\u2019s<\/span><span data-preserver-spaces=\"true\"> greater than expected) and vice versa (lower than expected would cause mortgage rates to fall). If mortgage rates come in <\/span><span data-preserver-spaces=\"true\">exactly<\/span><span data-preserver-spaces=\"true\"> as <\/span><span data-preserver-spaces=\"true\">estimated by the banks<\/span><span data-preserver-spaces=\"true\">, Treasury yields and mortgage rates will likely not move much.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you have ever <\/span><span data-preserver-spaces=\"true\">been confused as to<\/span><span data-preserver-spaces=\"true\"> why a big decrease or increase in CPI didn\u2019t seem to move things, this is probably <\/span><span data-preserver-spaces=\"true\">why<\/span><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Jobs report<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Another key monthly economic data release from the BLS that can greatly affect interest rates is the jobs report<\/span><span data-preserver-spaces=\"true\">, which<\/span><span data-preserver-spaces=\"true\"> estimates how many overall jobs (nonfarm payroll employment) were added or subtracted in the prior month<\/span><span data-preserver-spaces=\"true\">, as well as a calculation of<\/span><span data-preserver-spaces=\"true\"> the unemployment rate.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">In 2024, this report <\/span><span data-preserver-spaces=\"true\">may have<\/span><span data-preserver-spaces=\"true\"> overtaken CPI as the <\/span><span data-preserver-spaces=\"true\">biggest<\/span><span data-preserver-spaces=\"true\"> market mover, as many financial experts expect the Fed to potentially cut rates if <\/span><span data-preserver-spaces=\"true\">large<\/span><span data-preserver-spaces=\"true\"> job losses occur and the unemployment rate spikes, even if inflation had not yet returned to the 2% target.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These reports are typically released on Friday mornings, also at 8:30 a.m. ET, once per month. Like CPI, the most important factor for how it will affect yields and mortgage loan rates is the reported numbers versus estimates (for both change in number of jobs and unemployment rate percentage), rather than comparisons to prior time frames.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Jobless claims<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">While the CPI report and jobs report are typically the biggest monthly market movers, the release of jobless claims also <\/span><span data-preserver-spaces=\"true\">has a <\/span><span data-preserver-spaces=\"true\">big<\/span><span data-preserver-spaces=\"true\"> effect on<\/span><span data-preserver-spaces=\"true\"> yields and mortgage rates.<\/span><span data-preserver-spaces=\"true\"> This report is weekly, not monthly, and is released every Thursday at 8:30 a.m. ET. It measures the number of both people newly filing for unemployment and continuing claims. Like the previous monthly reports, the market typically reacts to numbers <\/span><span data-preserver-spaces=\"true\">in comparison<\/span><span data-preserver-spaces=\"true\"> to estimates.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Producer Price Index (PPI)<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">The Producer Price Index (PPI) report is similar to CPI; however, it tracks<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.investopedia.com\/terms\/p\/ppi.asp\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> costs (and inflation) for producers<\/span><\/a><span data-preserver-spaces=\"true\">, such as product manufacturers or service suppliers. This <\/span><span data-preserver-spaces=\"true\">report is monthly and<\/span><span data-preserver-spaces=\"true\"> typically comes out the day following the CPI report. While it can <\/span><span data-preserver-spaces=\"true\">have an effect on<\/span><span data-preserver-spaces=\"true\"> yields and mortgage rates if it comes in higher or lower than expectations, it typically has a much smaller effect on yields and rates than the CPI report.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Personal Consumption Expenditures (PCE)<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">The Personal Consumption Expenditures (PCE) report is another measure of inflation. This one <\/span><span data-preserver-spaces=\"true\">is released<\/span><span data-preserver-spaces=\"true\"> by the Bureau of Economic Analysis instead of the Department of Labor. It is typically released about two weeks after the more well-known CPI report.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While the CPI report is generally more well-known, the PCE Index is becoming the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.morningstar.com\/markets\/whats-difference-between-cpi-pce\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Federal Reserve\u2019s preferred measure of inflation<\/span><\/a><span data-preserver-spaces=\"true\">. It\u2019s gaining more attention from market watchers and is considered more comprehensive data. This is also a monthly report released at the standard 8:30 a.m. ET time.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Job Openings and Labor Turnover Survey (JOLTS)<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">The Job Openings and Labor Turnover Survey, commonly <\/span><span data-preserver-spaces=\"true\">referred to as<\/span><span data-preserver-spaces=\"true\"> the JOLTS report, is another closely watched data release from the BLS that can move rates up and down. <\/span><span data-preserver-spaces=\"true\">This<\/span> <span data-preserver-spaces=\"true\">is a monthly report that<\/span><span data-preserver-spaces=\"true\"> shows how many job openings <\/span><span data-preserver-spaces=\"true\">are currently posted<\/span><span data-preserver-spaces=\"true\"> in the U.S.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Like other monthly data reports from the BLS, the market reaction to this report is mostly about job openings versus expectations. One quirk of this data release is that it comes out at 9 a.m. ET instead of 8 a.m. ET, like most other reports. <\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> can lead to mortgage market movement a bit later in the morning than people are used to.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">One recently highlighted issue regarding the JOLTS report, however, is that it is truly a survey<\/span><span data-preserver-spaces=\"true\">\u2014reliant on responses from companies<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> The BLS has highlighted this issue, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bls.gov\/osmr\/response-rates\/home.htm\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">noting a sharp decline<\/span><\/a><span data-preserver-spaces=\"true\"> in response rates over the last decade.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The fact that <\/span><span data-preserver-spaces=\"true\">a lot<\/span><span data-preserver-spaces=\"true\"> of this data is now estimated has <\/span><span data-preserver-spaces=\"true\">a lot of market experts calling into question whether this data is reliable\u2014and<\/span><span data-preserver-spaces=\"true\"> provides an opening for entrepreneurial people and companies to look for other ways to measure the data.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Fed meetings, minutes, and media interactions<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">While Federal Reserve meetings are when specific rate changes (or no changes) are announced, by the time the actual announcement happens, markets and rates rarely change too much since the move is generally predicted and priced in. (If you would like to track market expectations of rate changes, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cmegroup.com\/markets\/interest-rates\/cme-fedwatch-tool.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the FedWatch tool from the CME Group<\/span><\/a><span data-preserver-spaces=\"true\"> is extremely useful.)<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">However, yields and mortgage rates can be greatly changed by Federal Reserve actions\u2014the real drivers are the policy press releases and press conferences<\/span> (typically scheduled for the <span data-preserver-spaces=\"true\">early afternoon, a couple of hours after the publication of the decision). There, market traders decipher the statements of the Federal Reserve Chair, as well as answers to questions from the press. Yields can dramatically spike up and down during the press conference.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Additionally, the minutes of the Federal Reserve meetings are usually released a couple of weeks after the date of the decision and release. While the lag between the meeting occurrences and the minute&#8217;s release makes much of the data stale, the minute&#8217;s releases can indeed move markets, as investors can gain further insight into the conversations among voting members.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">An additional driver of rates is the quarterly release of a \u201cdot plot\u201d showing each<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bankrate.com\/banking\/federal-reserve\/how-to-read-fed-dot-plot-explained\/#:~:text=The%20Fed&#039;s%20dot%20plot%20is%20a%20chart%20updated%20quarterly%20that,end%20of%20each%20calendar%20year.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Fed official\u2019s projection for interest rates<\/span><\/a><span data-preserver-spaces=\"true\"> for the upcoming couple of years. Since this chart is <\/span><span data-preserver-spaces=\"true\">harder<\/span><span data-preserver-spaces=\"true\"> to boil down to a single expectation number like the previously discussed reporting metrics, this rarer release can affect yields, as it provides an infrequent insight into the longer-term rate outlook from Federal Reserve officials.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">University of Michigan Survey<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">As inflation has taken center stage in the last few years in the United States, formerly minor surveys and data releases have increased in importance and their effect on Federal Reserve rate thinking and, thus, mortgage rates. A<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/data.sca.isr.umich.edu\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> monthly survey<\/span><\/a><span data-preserver-spaces=\"true\"> conducted by the University of Michigan that measures<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fred.stlouisfed.org\/series\/UMCSENT\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> consumer sentiment<\/span><\/a><span data-preserver-spaces=\"true\"> and inflation expectations has affected yields and offered a data point for predicting Federal Reserve actions.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Purchasing Managers Index (PMI)<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Another factor starting to gain steam in terms of affecting mortgage rates are various regional Purchasing Managers Index reports, which offer a glimpse into the health of the economy. <\/span><span data-preserver-spaces=\"true\">A sharp downturn in economic metrics (leading to higher unemployment) is seen by most bond market experts as the likely catalyst for the next rate of sharply reduced rates.<\/span><span data-preserver-spaces=\"true\"> So when we have seen recent low readings (versus expectations) of some of these <\/span><span data-preserver-spaces=\"true\">types of<\/span><span data-preserver-spaces=\"true\"> reports lately, yields and rates have fallen.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">One example of a PMI report is the Chicago Purchasing Managers Index,<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.investing.com\/economic-calendar\/chicago-pmi-38\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> which determines the health of the manufacturing sector in the Chicago region<\/span><\/a><span data-preserver-spaces=\"true\">. To follow these reports, it&#8217;s critical to understand how the metric is derived\u2014in this case, there is a score <\/span><span data-preserver-spaces=\"true\">given<\/span><span data-preserver-spaces=\"true\"> between 0 and 100, with 50 meaning stable, above 50 equating to expansion, and below 50 indicating a contraction.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Auctions<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Large Treasury auctions, or large sales of new Treasury bonds by the United States federal government, have also <\/span><span data-preserver-spaces=\"true\">had an effect on<\/span><span data-preserver-spaces=\"true\"> mortgage rates. <\/span><span data-preserver-spaces=\"true\">These large sales can move bonds higher or lower<\/span><span data-preserver-spaces=\"true\">, depending on investor appetite and pricing<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Unlike most of the other reports that generally come early in the morning, before many mortgage lenders release rates for the day, these typically occur in the middle of the day or afternoon and can be responsible for midday mortgage rate moves.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">While the bond market and U.S. financial system can be daunting and complex, following changes in DSCR loan rates (rental property mortgage rates), it mostly boils down to future expectations for Federal Reserve rate decisions\u2014which are primarily driven by various economic data reports that measure inflation and the strength of the jobs market.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">When will mortgage rates drop? <\/span><span data-preserver-spaces=\"true\">Nobody knows for sure, but if you are tracking these indicators and <\/span><span data-preserver-spaces=\"true\">start<\/span><span data-preserver-spaces=\"true\"> seeing data showing inflation <\/span><span data-preserver-spaces=\"true\">coming in<\/span><span data-preserver-spaces=\"true\"> below expectations, with fewer new jobs and more unemployment, a drop in <\/span><span data-preserver-spaces=\"true\">investment property loan interest rates<\/span><span data-preserver-spaces=\"true\"> will surely soon follow.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Follow the author of this article, Easy Street Capital Partner Robin Simon, on<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/linktr.ee\/robinsimonesc\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> multiple social platforms<\/span><\/a><span data-preserver-spaces=\"true\">, including X and BiggerPockets, for daily market insights as well!<\/span><\/p>\n\n\n\n<div class=\"wp-block-group border border-gray-200 p-6 rounded-md has-slate-50-background-color has-background\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n    \n  <div \n    id=\"segemnt-view-event-block_624f52525847f\" \n    class=\"  \"\n    x-intersect:enter.once=\"\n      analytics.track('Easy Street Capital Blog Sponsor View', {\n        referrer: 'https:\/\/www.biggerpockets.com\/blog\/2024-dscr-loan-rates-and-how-to-track',\n              })\n    \">\n    \n  <\/div>\n  \n\n\n<h3 class=\"wp-block-heading has-text-align-left mt-0\"><strong>This article is presented by Easy Street Capital<\/strong><\/h3>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/01\/Easy-Street-Capital-Logo-1024x1024.png\" alt=\"Easy street capital logo\" class=\"wp-image-146472\" style=\"width:232px;height:217px\" width=\"232\" height=\"217\" title=\"\"><\/figure>\n\n\n\n<p>Easy Street Capital is a private real estate lender headquartered in Austin, Texas, serving real estate investors around the country. Defined by an experienced team and innovative loan programs, Easy Street Capital is the ideal financing partner for real estate investors of all experience levels and specialties.&nbsp;Whether an investor is fixing and flipping, financing a cash-flowing rental, or building ground-up, we have a solution&nbsp;to fit those needs.<\/p>\n\n\n\n<div id=button-custom-event-block_63c9a33918e17 class='button-custom-event'>\n      <a href=\"https:\/\/www.easystreetcap.com\/dscr-loans-guide\/\" x-on:click=\"window.analytics.track(&#039;Sponsored Blog CTA Click&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/2024-dscr-loan-rates-and-how-to-track&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\" rel=\"noopener\">Learn More About Easy Street Capital<\/a>\n  <\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\"><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>DSCR loans have moved at unprecedented rates. Real estate investors navigating the challenging market of 2024\u2014with mortgage rates still at elevated levels\u2014are at an advantage.<\/p>\n","protected":false},"author":613643,"featured_media":174180,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7403,7119],"tags":[],"class_list":["post-174175","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-money","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/174175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613643"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=174175"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/174175\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/174180"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=174175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=174175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=174175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}