Weekly Mortgage Rate Update- 12-17-24
Weekly Mortgage Rates
December 17, 2024
Two steps forward and one step back
Maybe that is the rate story of 2024. Every time rates made a move lower; they couldn’t hold onto it and reverted higher. This the result of inflation remaining stuck above target and the economy holding steady. Last week ended with rates moving back up a little, erasing some of our recent gains on hotter inflation data.
Inflation is not going down
CPI increased 0.3% for the month and now sits at an annual pace of 3.3% on the Core. Zero progress has been made on inflation in recent months. This week we will get more inflation data on Friday with PCE, the Fed’s target inflation rate is based on this inflation report.
A look back on the inflation path for 2024
Looking back this year on Core PCE we saw no real progress. In January 2024 the core PCE annual pace was about 3.1%. As of its last reading for October it was at 2.8%. November core PCE will be released Friday and is expected to increase to 2.9%.
The Fed interest rate and policy decision is the key event this week
Nick Timiraos with the Wall Street Journal is known as the Fed Whisperer, telling markets what the Fed wants them to hear. Nick came out with an article this weekend hinting that despite the higher inflation reading last week, they will still lower the Fed rate .25%. Then most likely a pause on cuts heading into 2025. The expected cut won’t change current mortgage rates. Instead, we are focused on the economic projections that will be released which will map out all 19 board members projections for 2025. This will be the first look at these projections by the Fed after the election results. The bond market is keenly interested in this because that is what they are trying to gauge right now with a new administration coming in. These projections are what could move mortgage rates one way or the other.
2024 taught us that the Fed rate is indeed not tied to mortgage rates
The Fed has lowered its rate 75 basis points so far this year and is expected to add another 25 to that tomorrow, bringing the Fed rate down 1.00% this year. The pivot to lowering its rates coincided with mortgage rates moving higher.
2024 in review
This will be the last update for the year, so I have been looking back over the weekly updates this year. Mortgage rates ranged from 6.10% to 7.5% this year. With the median rate mostly in the high 6’s. The improvement we saw in rates this year came when we had weaker employment readings and the months with tamer inflation readings. We will need inflation to come down and/or employment to soften more to see an improvement in rates. Do you see either happening? That is the question going into 2025. We hope you have a wonderful holiday season, and we will review the 2025 outlook and what impact the Fed meeting this week has on that when we return.
This Week’s Rates
|
Loan Type |
Conventional 30 year |
JUMBO 30 Year |
FHA 30 year |
VA 30 Year |
|
Interest rate |
6.625% |
7.00% |
5.99% |
5.99% |
|
APR |
6.77%* |
7.09%** |
6.92%*** |
6.137%**** |
LICENSED BY THE CALIFORNIA DEPARTMENT OF REAL ESTATE LICENSE A division of TYKY (DRE #01919683) (NMLS LICENSE #257773)
RATES ARE CURRENT AS OF 12-17-2024. SUBJECT TO BORROWER APPROVAL, FICO SCORE, LTV AND PROPERTY TYPE
*APR IS BASED ON ESTIMATED FINANCE CHARGES OF $6935
**APR BASED ON ESTIMATED FINANCE CHARGES OF $16,430
***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, $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.