Weekly Mortgage Rate Update- 6-4-24
The Fed’s key inflation measure PCE, was released last week and came in mostly in line with expectations showing inflation continuing to increase at the same pace as March. Core PCE did show a slightly slower pace of 0.2% increase from a 0.3% in March. Core PCE is still at 2.8% annualized pace. Of note in the report was discretionary spending by consumers slowed, the main sticking points in the report are non-discretionary costs- Healthcare and Shelter. The response on Friday from the report was a sigh of relief that the inflation pace didn’t increase further.
The economy is slowing. More confirmation on this yesterday when the U.S. ISM manufacturing index showed further contraction in the sector than anticipated and more than last month showed. Chicago PMI regional manufacturing cratered further and is at depression era levels. Construction spending also decreased slightly for the month. 1st quarter GDP was also revised lower from 1.6% initial release to 1.3%, slowest in 2 years. Today 2nd quarter GDP estimates were also revised lower from 2.4% anticipated growth to 1.8%. Despite the slowing, underlying input costs in these recent reports shows inflation still trending higher. Mortgage rates have improved and reversed the losses from last week on all the slowing economic news.
Tomorrow the ISM index for the services sector will be released. This one is important as it is a much larger segment than manufacturing is in our economy.
It’s the first week of the month when we always get the employment data. Will the slowing economy finally show up in the May job numbers? Today, JOLTS showed unfilled open positions declined, this doesn’t always show up in the non-farm payrolls though. Slowing employment growth is the green light the Fed has been waiting on to act.
I try not to make this weekly update too long, but this was an important quote on the employment data that I wanted to share from Anna Wong, Bloomberg economist. “Many Fed officials seem to believe the labor market is still tight, but we estimate, based on more comprehensive measures, that monthly nonfarm payroll prints likely overstated job growth by 730k last year - with hiring maybe even falling below zero in October. Much of the downward revision was due to a surge in business closures, even as new business formation slowed sharply in the second half of the year - factors the payroll prints don't into account.” Regardless of the read Friday, the employment sector may not be as strong as the Fed’s metrics show.
For now, rates are significantly better than last week. Friday’s employment reports- accurate or not, will determine if they can hold onto the improvement.
|
Loan Type |
Conventional 30 year |
Conventional 15 year |
FHA 30 year |
VA 30 Year |
|
Interest rate |
6.75% |
6.00% |
6.125% |
6.125% |
|
APR |
6.91%* |
6.26%* |
6.70%** |
6.34%*** |
LICENSED BY THE CALIFORNIA DEPARTMENT OF REAL ESTATE LICENSE A division of TYKY (DRE #01919683) (NMLS LICENSE #257773)
RATES ARE CURRENT AS OF 06-04-2024. 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.