Weekly Mortgage Rate Update- 08-06-24
Mortgage rates made a big move lower on the perfect trifecta of the Fed, economic news, and global developments all falling into place.
After the FOMC meeting ended Wednesday, the consensus was that Powell left the door open for a September cut as their attention turned to a slowing in the job market as the biggest concern over inflation. On Friday that was confirmed with the non-farm payrolls for July showed a big miss on the jobs added for the month and the unemployment rate rose to 4.3%. It was 3.5% pre-covid and just a year ago. This is what the Fed wanted, to slow growth, but it is slowing faster than anticipated. If it weakens too quickly then they will have to be more aggressive with rate cuts. The odds of the first cut in September now show most expecting a .50% cut versus .25% that was expected before the job numbers.
For now, the bond market is doing the work for the Fed lowering rates across the yield curve including mortgage rates as demand grows for the safety of bonds.
In addition to the economic news, lower rates are being supported by growing geopolitical uncertainty. The middle east conflict has intensified leading a flight to safety when money flows into bonds, which helps lower all rates. Adding to the uncertainty the Asian markets led a global sell off in stocks on Friday and continuing into Monday on the heels of Japan’s central bank raising its rate to .25% after a decade of zero percent or negative rates. This caused the yen to rise. The TL;DR on this is that investors in Japan and abroad were borrowing basically free money on the weaker Yen to buy stocks and investments in our US markets. An increase in the Yen caused those carry trades to unravel. Time will tell if this is a temporary liquidity issue or a deeper underlying issue. Today so far markets are recovering from the deep sell off and regrouping.
We are already off the best pricing we had which was on Friday and Monday morning. The good news is the 10 year is now trading well below the 4.20% line we were testing for the past few weeks, now well below 4.00%
with no real economic news this week, the markets will have time to digest if for a few days so global developments may set the direction for the rest of the week.
It’s a good time to lock in the lowest rates we have seen in over a year.
|
Loan Type |
Conventional 30 year |
Conventional 15 year |
FHA 30 year |
VA 30 Year |
|
Interest rate |
6.125% |
5.75% |
5.75% |
5.75% |
|
APR |
6.279%* |
6.005%* |
6.459%** |
5.895%*** |
LICENSED BY THE CALIFORNIA DEPARTMENT OF REAL ESTATE LICENSE A division of TYKY (DRE #01919683) (NMLS LICENSE #257773)
RATES ARE CURRENT AS OF 08-06-2024. SUBJECT TO BORROWER APPROVAL, FICO SCORE, LTV AND PROPERTY TYPE
*APR IS BASED ON ESTIMATED FINANCE CHARGES OF $6935
**APR IS BASED ON ESTIMATED FINANCE CHARGS OF $10,969 THIS INCLUDES FHA MORTGAGE INSURA
NCE PREMIUM
***APR BASED ON ESTIMATED FINANCE CHARGES OF $8343
FEES INCLUDE 1% POINTS, NO Loan Origination Fee , $1095 PROCESSING AND $0 UNDERWRITING FEE
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.