Fed rate increases could lead to lower mortgage rates, Habib says
“If you’re asleep at the wheel like many of my competitors, you would miss the opportunity,” he said.
Habib also questions whether the job market is as strong as the Fed believes. He expects the August figure to be revised lower again.
“I think it’s got some cracks in it, and I believe that this is a bit dangerous for the Fed because if the Fed has been hanging their hat on the labor market, they say, ‘Okay, inflation’s too high,’ and they only have really one instrument, a very dull instrument to raise rates,” he said.
Clients keep asking when rates will come down. Habib points to oil prices. West Texas Intermediate crude has been above $100 a barrel, about 50% above where it was prior to the conflict in the Middle East, Habib said.
“The answer to that right now really lies in the oil market,” he said. “Inflation is not that terrible, and the Fed is taking steps now that more than likely will cause the economy to slow down. That will be a benefit for rates. You get oil to calm down, you can see a lot better interest rate environment.”
