If there’s one thing that makes mortgage professionals sweat, it’s trying to keep up with the ever-shifting mortgage market. Between Fed meetings, inflation data, and bond prices, it’s easy to feel overwhelmed. That’s why I sat down with Bill Bodnar, the Chief Revenue Officer at Tabrasa and creator of the Mortgage Market Guide, to break down what mortgage professionals really need to know about the market right now.
Bill has been doing this for over two decades, helping mortgage pros navigate the chaos with clarity and actionable insights. Whether you’re a seasoned veteran or new to the industry, this is a conversation you don’t want to miss.
What’s Going On with the Fed and Rates?
Let’s start with the big question on everyone’s mind: What’s happening with interest rates?
Bill explained that the Federal Reserve (the Fed) plays a critical role in managing the economy by controlling short-term interest rates. Their dual mandate is to maintain price stability (inflation) and maximum employment.
Recently, the Fed cut rates by 100 basis points, but instead of mortgage rates improving, they jumped. Why? According to Bill, it’s not just about what the Fed does—it’s about what they say.
“The Fed uses jawboning—talking the market up or down—to influence behavior without actually taking action,” Bill said.
When the Fed sounds uncertain about inflation, markets lose confidence, driving up rates even when the Fed is cutting.
The Inflation-Mortgage Rate Connection
If you’ve been in the business for more than five minutes, you know inflation is a key driver of mortgage rates. But why?
Bill broke it down like this:
- Inflation erodes the value of money.
If a dollar today buys less in the future, investors demand higher yields on bonds to compensate. - Bond yields set the stage for mortgage rates.
When inflation rises, bond yields rise, and so do mortgage rates.
“Think of inflation like a tide that lifts all boats. If inflation rises, interest rates have to rise too,” Bill explained.
