Weekly Mortgage Rate Update- 10-15-2024
Rates continued to rise last week after the CPI inflation reading came in higher than expected. It showed inflation increased 0.2% for the month of September, higher than the 0.1% expected. More importantly, the key inflation measure, Core CPI rose to a 3.3% annual pace, higher than the expectations of 3.2%. Is inflation still coming down or is it stuck? That is the question on the mind of bond traders.
Offsetting the inflation data to a degree we saw an increase in the weekly jobless claims last week. Looking ahead, the next few readings on employment may show weakness in the aftermath of two devastating hurricanes. How much weight markets will give to the data remains to be seen. Perhaps they will discount it some as the result of the storms being a temporary event, but how long will the recovery be in these areas? This could help the rates improve in the weeks ahead.
Today rates are improving led by a decrease in oil prices. The tensions in the middle east are still high, but no further escalation has taken place which is helping oil prices. Oil prices are an indicator of future inflation and therefore shape our rate outlook.
“The 10 year don’t lie” a good friend and mentor, Jeff Wiley always told me this. I am thinking of it now as the 10-year Treasury bond has pushed up significantly in the weeks since the Fed decided to do a large rate cut and the 10-year rebelled. The move causing all long-term rates, including mortgages, to rise. What is the 10-year telling us? Perhaps that the neutral rate is higher than we are hoping for, at least in the foreseeable future. Lawrence Yun, NAR chief economist maybe thinking the same thing. He said last week, “ I think the 6% mortgage rate will be the new normal.” He also said following the Fed rate cut, “Future Fed rate cuts are not only anticipated but will not be as impactful because large federal borrowing will leave less capital available for mortgage lending.” Our deficits are funded by the sale of treasury bonds and therefore will absorb some of the demand that might otherwise go into the mortgage bond sector. This weighs heavily on the rate outlook.
This week is going to be a little quieter on the economic data than the last couple eventful weeks have been. Our key day is Thursday with retail sales, looking to see how the consumer is holding up. Enjoy the calm before the storm, as we get closer to the elections, a lot of key economic reports will hit at the same time. It will most likely get pretty volatile for a minute with uncertainty as the main driver.
|
Loan Type |
Conventional 30 year |
Conventional 15 year |
FHA 30 year |
VA 30 Year |
|
Interest rate |
6.375% |
5.99% |
5.625% |
5.75% |
|
APR |
6.532%* |
6.246%* |
6.641%** |
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 10-15-2024. 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.