Weekly Mortgage Rate Update- 8-27-2024
When it comes to the Fed fund rate it’s no longer a matter of when they will cut but by how much, as the attention turns from inflation to the labor market.
In economic news last week the BLS revised the number of jobs added to the economy from March 2023 to March 2024 by 818,000 jobs. This is after all the other monthly revisions we have been getting means the initial numbers that the Fed and markets relied on was overstated by about 1.2 million jobs. The 2nd largest revision in history. Markets knew the numbers were off, but many didn’t expect it to be this degree.
“The time has come for policy to adjust” Powell said in his speech Friday that followed the revisions. Yes, we have turned a corner on policy definitively towards lower rates. A cut of .25% in September is already baked into current rates. Now the question is .25% or .50% cut and how many more before the end of the year?
It’s a goldilocks moment Powell doesn’t want to get this wrong . He doesn’t want to repeat Volcker and cut too soon only to have to reverse course and tighten more aggressively. But many think that the Fed waited too long to move. The unemployment rate is at 4.3% which isn’t bad on its own. It’s the speed that it has increased which is concerning 3.6% to 4.3% in a year is a fast move higher. Add to that the revisions to the job numbers showing the economy isn’t as hot as once thought. This has many believing that the Fed is behind the curve and moving to loosen policy too late.
PCE inflation reading comes out this Friday. If we don’t see a big move higher with inflation, rates will probably stay in the current ranges until the August jobs data is released on September 6th. Remembering the July jobs data is what really triggered the recent improvements in pricing, this next reading ahead of the Fed September meeting is going to be the key to how much they decide to cut.
We are ending the summer season with rates about 1% lower than last year. The bellwether 10 year hasn’t yet been able to break below the 3.80% and hold yet. Once it does, we can see a path for rates to move lower.
|
Loan Type |
Conventional 30 year |
Conventional 15 year |
FHA 30 year |
VA 30 Year |
|
Interest rate |
6.125% |
5.50% |
5.50% |
5.625% |
|
APR |
6.279%* |
5.753%* |
6.459%** |
5.769%*** |
LICENSED BY THE CALIFORNIA DEPARTMENT OF REAL ESTATE LICENSE A division of TYKY (DRE #01919683) (NMLS LICENSE #257773)
RATES ARE CURRENT AS OF 08-27-2024. 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.