Mortgage Rate Watch
A new home can be the biggest purchase of your life. Before you start looking for the right home, you may want to research your mortgage options.
But not all mortgages are created equal. So, by doing your research beforehand, you can choose the option that best suits your financial situation and potentially puts more money in your pocket. You also know what guidelines to follow when applying.
Types of mortgages
- Conventional loan – Best for borrowers with a good credit score
- Jumbo loan – Best for borrowers with excellent credit looking to buy an expensive home
- Government-insured loan – Best for borrowers who have lower credit scores and minimal cash for a down payment
- Fixed-rate mortgage – Best for borrowers who’d prefer a predictable, set monthly payment for the duration of the loan
- Adjustable-rate mortgage – Best for borrowers who aren’t planning to stay in the home for an extended period, would prefer lower payments in the short-term and are comfortable with possibly having to pay more in the future
Conventional loans, which are not backed by the federal government, come in two forms: conforming and non-conforming.
Conforming loans – As the name implies, a conforming loan “conforms” to the set of standards put in place by the Federal Housing Finance Agency (FHFA), which includes credit, debt and loan size. For 2023, the conforming loan limits are $726,200 in most areas and $1,089,300 in high-cost areas.
Non-conforming loans – These loans do not meet FHFA standards. Instead, they cater to borrowers looking to purchase more-expensive homes or individuals with unusual credit profiles.
- Can be used for a primary home, second home or investment property
- Overall borrowing costs tend to be lower than other types of mortgages, even if interest rates are slightly higher
- Can ask your lender to cancel private mortgage insurance (PMI) once you’ve reached 20 percent equity, or refinance to remove it
- Can pay as little as 3 percent down on loans backed by Fannie Mae or Freddie Mac
- Sellers can contribute to closing costs
- Minimum FICO score of 620 or higher is often required (the same applies for refinancing)
- Higher down payment than some government loans
- Must have a debt-to-income (DTI) ratio of no more than 45 percent (50 percent in some instances)
- Likely need to pay PMI if your down payment is less than 20 percent of the sales price
- Significant documentation required to verify income, assets, down payment and employment
If you have a strong credit score and can afford to make a sizable down payment, a conventional mortgage is probably your best pick. The 30-year, fixed-rate mortgage is the most popular choice for homebuyers.
Jumbo mortgages are home loan products that fall outside FHFA borrowing limits. Jumbo loans are more common in higher-cost areas such as Los Angeles, San Francisco, New York City and the state of Hawaii, where home prices are often on the higher end.
Pros of jumbo loans
- Can borrow more money to purchase a more expensive home
- Interest rates tend to be competitive with other conventional loans
- Often the only finance option in areas with extremely high home values
Cons of jumbo loans
- Down payment of at least 10 percent to 20 percent required in many cases
- A FICO score of 700 or higher usually required
- Cannot have a DTI ratio above 45 percent
- Must show you have significant assets in cash or savings accounts
- Usually require more in-depth documentation to qualify
Who are jumbo loans best for?
If you’re looking to finance a home with a selling price exceeding the latest conforming loan limits, a jumbo loan is likely your best route.
The U.S. government isn’t a mortgage lender, but it does play a role in making homeownership accessible to more Americans by guaranteeing certain types of loans — thus lessening the risk for lenders. Three government agencies back mortgages: the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) and the U.S. Department of Veterans Affairs (VA).
- FHA loans – Backed by the FHA, these home loans come with competitive interest rates, and help make homeownership possible for borrowers without a large down payment or pristine credit. You’ll need a minimum FICO score of 580 to get the FHA maximum of 96.5 percent financing with a 3.5 percent down payment. However, a score as low as 500 is allowed if you put at least 10 percent down. FHA loans require mortgage insurance premiums, which can increase the overall cost of your mortgage. Lastly, with an FHA loan, the home seller is allowed to contribute to closing costs.
- USDA loans – USDA loans help moderate- to low-income borrowers who meet certain income limits buy homes in rural, USDA-eligible areas. Some USDA loans do not require a down payment for eligible borrowers. There are extra fees, though, including an upfront fee of 1 percent of the loan amount (which can typically be financed with the loan) and an annual fee.
- VA loans – VA loans provide flexible, low-interest mortgages for members of the U.S. military (active duty and veterans) and their families. There’s no minimum down payment, mortgage insurance or credit score requirement, and closing costs are generally capped and may be paid by the seller. VA loans charge a funding fee, a percentage of the loan amount, which can be paid upfront at closing or rolled into the cost of the loan along with other closing costs.
Pros of government-insured loans
- Help you finance a home when you don’t qualify for a conventional loan
- Credit requirements more relaxed
- Don’t need a large down payment
- Available to repeat and first-time buyers
- No mortgage insurance and no down payment required for VA loans
Cons of government-insured loans
- Mandatory mortgage insurance premiums on FHA loans that usually cannot be canceled
- FHA loan sizes are lower than conventional mortgages in most areas, limiting potential inventory to choose from
- Borrower must live in the property (although you may be able to finance a multi-unit building and rent out other units)
- Could have higher overall borrowing costs
- Expect to provide more documentation, depending on the loan type, to prove eligibility
Who are government-insured loans best for?
Are you having trouble qualifying for a conventional loan due to a lower credit score or minimal cash reserves for a down payment? FHA-backed and USDA-backed loans could be a viable option. For military service members, veterans and eligible spouses, VA-backed loan terms are often more generous than a conventional loan’s.
Fixed-rate mortgage
Fixed-rate mortgages maintain the same interest rate over the life of your loan, which means your monthly mortgage payment always stays the same. Fixed loans typically come in terms of 15 years or 30 years, although some lenders allow borrowers to pick any term between eight and 30 years.
Pros of fixed-rate mortgages
- Monthly principal and interest payments stay the same throughout the life of the loan
- Easier to budget housing expenses from month to month
Cons of fixed-rate mortgages
- If interest rates fall, you’ll have to refinance to get that lower rate
- Interest rates typically higher than rates on adjustable-rate mortgages (ARMs)
Who are fixed-rate mortgages best for?
If you are planning to stay in your home for at least five to seven years, and want to avoid the potential for changes to your monthly payments, a fixed-rate mortgage is right for you.
In contrast to fixed-rate loans, adjustable-rate mortgages (ARMs) have interest rates that fluctuate with market conditions. Many ARM products have a fixed interest rate for a few years before the loan changes to a variable interest rate for the remainder of the term. For example, you might see a 7/6 ARM, which means that your rate will remain the same for the first seven years and will adjust every six months after that initial period. If you consider an ARM, it’s essential to read the fine print to know how much your rate can increase and how much you could wind up paying after the introductory period expires.
Pros of ARMs
Lower fixed rate in the first few years of homeownership (although this isn’t a guarantee; as of late, 30-year fixed rates have actually been similar to those for 5/6 ARMs)
Can save a substantial amount of money on interest payments
Cons of ARMs
Monthly mortgage payments could become unaffordable, resulting in a loan default
Home values may fall in a few years, making it harder to refinance or sell before the loan resets
Who are adjustable-rate mortgages best for?
If you don’t plan to stay in your home beyond a few years, an ARM could help you save on interest payments. However, it’s important to be comfortable with a certain level of risk that your payments might increase if you’re still in the home.
Other types of home loans
In addition to these common kinds of mortgages, there are other types you may find when shopping around for a loan:
- Construction loans: If you want to build a home, a construction loan can be a good financing choice — especially a construction-to-permanent loan, which converts to a traditional mortgage once you move into the residence. These short-term loans are best for applicants who can provide a higher down payment and proof that they can afford the monthly payments.
- Interest-only mortgages: With an interest-only mortgage, the borrower makes interest-only payments for a set period – usually five and seven years — followed by payments for both principal and interest. You won’t build equity as quickly with this loan, since you’re initially only paying back interest. These loans are best for those who know they can sell or refinance, or for those who can reasonably expect to afford the higher monthly payment later.
- Piggyback loans: A piggyback loan, also referred to as an 80/10/10 loan, involves two loans: one for 80 percent of the home price and another for 10 percent. You’ll make a down payment for the remaining 10 percent.These loan products are designed to help the borrower avoid paying for mortgage insurance. But piggyback loans require two sets of closing costs, and you’ll also accrue interest on two loans, making this unconventional arrangement these best for those who will actually save money using it.
- Balloon mortgages: A balloon mortgage requires a large payment at the end of the loan term. Generally, you’ll make payments based on a 30-year term, but only for a short time, such as seven years. When the loan term ends, you’ll make a large payment on the outstanding balance, which can be unmanageable if you’re not prepared or your credit situation deteriorates. These loans are best for those who have the stable financial resources needed to make a large balloon payment once the loan term ends.
Mortgage Rates Drop to Lowest Levels Since April 2023
Mortgage rates have a long and storied history of making big moves on the day that the big monthly jobs report comes out. In that regard, today was fairly normal. Indeed, the jobs report came out and mortgage rates made their biggest move of the week, dropping to the lowest levels since April 2023. The biggest catch in today's case was the fact that much of the market movement came in response to comments from several Fed officials who weighed in on the prospects for the rate cut in a week and a half. Granted, the jobs report influenced those comments, but they were ultimately reduced to votes for a 0.25% vs a 0.50% rate cut (the Fed is cutting either way). To be fair, the Fed comments had a bigger impact on parts of the market that don't directly correlate with mortgage rates. That was a victory for us today. Rates would have been higher otherwise. If this seems slightly confusing, it's important to remember that the Fed Funds Rate does not move hand in hand with mortgage rates. Mortgage rates move well in advance of the Fed because mortgage rates are tied to the real-time bond market whereas the Fed only updates rates 8 times per year. Moreover, the Fed Funds Rate applies to the shortest time frames (<24 hours) whereas the average mortgage lasts around 5 years. The takeaway is that you should NOT expect mortgage rates to improve after the Fed cuts rates. Mortgage rates have ALREADY improved in anticipation of the rate cut.
6 days 8 hours ago
Checkout newsLowest Rates in a Year and a Half. Friday Could Take Them Even Lower (Or Cause a Big Bounce)
Wouldn't it be nice if you could know what was going to happen with mortgage rates before it actually happened? Since the dawn of time in financial markets, there's someone who's willing to make a seemingly compelling prediction about the future for every person who's willing to believe such things are better than 50/50 guesses. When it comes to time frames as short as 24 hours, it's a 100% coin flip. Reason being: Friday's direction will be determined by the outcome of the Employment Situation (aka, the jobs report)--the single most important scheduled economic report on any given month. This installment is particularly important because it's in a unique position to influence the Federal Reserve's decision on the size of the rate cut that will be announced in 2 weeks. Financial markets have long since adjusted to the expected outcome of the jobs report. In other words, if jobs come in at or around 160k payrolls, that's not actionable news even though it would constitute a big improvement over last month's 114k. It's the scenarios where the payroll count is less than 100k or more than 200k where the market is more likely to go a bit wild. Under 100k would likely result in another meaningful move toward even lower rates than today's (already the lowest since April 2023). Over 200k would mean a quick return to the recent range. For better or worse, it's not out of the realm of possibility to see rates move by 0.1 to 0.2%. Contrast that to the average change over the past 2 weeks of less than 0.05%. The report will be released at 8:30am ET which is well before mortgage lenders set their rates for the day.
1 week ago
Checkout newsMortgage Rates Near Recent Lows as Markets Wait For Jobs Report
Mortgage rates moved lower for the 2nd straight day on Wednesday with the average lender right in line with their lowest levels since August 5th. In fact, most borrowers would see little--if any difference between today's loans quotes and those from August 5th. As such, today's rates basically match the lowest in well over a year. This is made possible by a series of economic reports that have "played nice" with the notion of the Fed cutting rates by at least 0.25% at the next meeting in 2 weeks. The bond market (which includes bonds that drive daily changes in mortgage rates) is constantly adjusting to get in position for the Fed's most likely course of action. By the time the Fed actually cuts, most of the mortgage rate movement associated with that cut will have already happened. If economic data is important in determining the near-term momentum, the next two days are critical. Tomorrow's combination of Jobless Claims and the ISM Services index will set the tone early, but it will ultimately be Friday's big jobs report that provides the best chance for clarity on the Fed's rate cut plans. Weaker jobs data would increase the odds of a 0.50% rate cut, and mortgage rates would drop in anticipation. Conversely, a stronger-than-expected jobs report would solidify the case for a 0.25% cut, likely pushing mortgage rates a bit higher in the interim. There's no way to know which direction things will go in the coming days, only that there is greater potential for the move to be bigger than those seen in recent days.
1 week 1 day ago
Checkout newsMortgage Rates Slightly Lower With Important Data Looming
You never know what you're going to get on the days surrounding a 3 day weekend for financial markets, and that's doubly true when it corresponds with the final/first trading day of the month. Despite all of those potential curveballs, the bond market stayed calm enough for mortgage rates to do the same. Friday took rates slightly higher, but that modest move has been erased at the start of the new week/month. Each of the next 3 days contains important economic data with the power to impact rates. The most important report of the week (and the month, for that matter) is Friday's Employment Situation (aka "the jobs report"). This report is especially important as it has a chance to bolster or refute the case made by the previous report (the one that was much weaker than expected, thus resulting in sharply lower rates). In general, stronger data will put upward pressure on rates and vice versa.
1 week 2 days ago
Checkout newsMortgage Rates End The Week Roughly Unchanged
Day to day movement has been subdued in mortgage rates recently, and now the week over week movement is just as uneventful. Friday's average top tier 30yr fixed rate almost perfectly matched last Friday's and it was identical to where we began the week. Given the absence of any major market moving motivations, this isn't a surprising turn of events. That said, it's worth considering that the past 3 days have seen gradual upward pressure implied by the bond market. This didn't immediately translate to upward pressure in mortgage rates due to the timing of the market movement relative to when mortgage lenders set rates for the day. Whether or not this ends up looking like a vague warning sign depends on the economic data in the coming week. Unlike the present example, there are important data points each day with the most important report of them all--the jobs report--on Friday. If there's a strong bias toward strength or weakness in the data, it will go a long way toward resolving the debate over the size of the Fed's rate cut in 3 weeks. The rate cut itself has no bearing on mortgage rates, but shifts in rate cut expectations tend to produce comparable shifts in mortgage rates in the run up to the Fed's official announcement.
1 week 6 days ago
Checkout newsMortgage Rates Are Not Actually The Lowest Since April 2023
It continues to be the case that mortgage rates are moving in a very narrow range with minimal changes from day to day. For instance, in the past week, the average mortgage payment would not have changed by more than $2 a month on a $300k loan. That said, the past two days have seen the biggest movements during that time with today's increase mostly erasing yesterday's improvement. The notion of rates moving "higher" is at odds with many of today's rate headlines due to the release of Freddie Mac's weekly rate index, which reported the lowest rate since April 2023 today. Freddie's survey is an average of Thursday through Wednesday's rates, reported the following day. This means that some of the days being counted will have seen even lower rates. Fortunately, our daily rate tracking leaves no doubt as to the recent movement. As we already noted, yesterday's rates were the 2nd lowest in more than a year, but still not quite as low as those seen on Monday August 5th. [thirtyyearmortgagerates] Will the average borrower see much of a difference? No, but facts are facts, and at the average lender, a $300k loan would have cost you about a thousand dollars less on August 5th in terms of the upfront cost required to secure the exact same rate today.
2 weeks ago
Checkout newsMortgage Rates Lower Despite Bond Market Weakness
On Wednesday, the average mortgage lender was quoting top tier, conventional 30yr fixed rates at the 2nd lowest level in more than a year. That's counterintuitive considering the modest losses in the bond market (weaker bonds = higher rates, all other things being equal). The explanation comes down to simple timing. Bonds were improving enough yesterday afternoon for many lenders to offer mid-day improvements. Between the lenders who were tentative in that approach and those who abstained altogether, there was still some room for improvement. More importantly, the bonds that directly affect mortgage rates actually began the day in slightly stronger territory. They've since lost some ground, but not enough for most lenders to issue mid-day changes in the other direction. Keep in mind, this does mean that the average lender would need to offer slightly higher rates tomorrow assuming the bond market is perfectly unchanged between now and then. How likely are we to see a perfectly unchanged bond market? It's always possible, but it's less likely on Thursday due to the scheduled release of more important economic data. Bonds take reliable cues from econ data and there hasn't been anything substantial so far this week. The relevance ramps up on the final two days and the following week will bring even higher stakes.
2 weeks 1 day ago
Checkout newsMortgage Rates Sideways to Slightly Lower
It was another generally uneventful day for the bond markets and, consequently, for the mortgage rates that take cues from bond market movement. While there were a few more economic reports on tap, none of them had a big impact on trading levels. Instead, bonds began the day in slightly weaker territory before spending the rest of the day inching slowly back toward stronger levels. This allowed many mortgage lenders to issue modest mid-day price improvements that helped the 30yr fixed rate index drop by a meager 0.02%--just enough for today to technically be a hair lower than yesterday.
2 weeks 2 days ago
Checkout newsMortgage Rates Basically Unchanged Over The Weekend
Mortgage rate movement is tied to activity in the bond market and like many things in the world of finance, the bond market depends on participation from human beings. As such, late summertime Mondays are occasionally superfluous when it comes to contributing to the broader interest rate narrative. Today was just such a Monday. The absence of meaningful impact can nonetheless be seen as a good thing considering there were no negative impacts. In fact, the average mortgage lender was able to lower its top tier conventional 30yr fixed rates by a microscopic amount compared to Friday's levels. While the rest of the week's data and events could result in more substantial movement, the potential volatility pales in comparison to what we may see in the following two weeks as the most highly consequential data is released.
2 weeks 3 days ago
Checkout newsMortgage Rates Fall to 2 Week Lows After Fed's Friendly Message
Every year, the Federal Reserve (aka "the Fed") gathers in Jackson Hole, WY with a bevy of other central bankers and academics to discuss and comment on monetary policy in a setting that's slightly less formal than normal. Despite the scenic backdrop, Jackson Hole speeches by the Fed Chair have a somewhat reliable history of relevance to financial markets--especially those that dictate interest rate movement. In this year's case, the symposium was almost perfectly timed to give Chair Powell an opportunity to append his last major appearance in the press conference that followed the Fed meeting just over 3 weeks ago. Rates liked what he had to say back then as well, but in today's speech, he said it a bit more forcefully. In not so many words, Powell made it clear that the default game plan is to cut rates at the September meeting just under 4 weeks from now. In fact, as far as financial markets are concerned, the only uncertainty is whether the rate cut will be the minimum 0.25% or double that amount. To be fair and clear, that's about where the market ended up after the last speech, but that was followed by several big ticket market movers that temporarily convinced traders the Fed would be cutting by AT LEAST 0.50% a few short days later. Over the 2 weeks that followed, several economic reports forced a rethink of those assumptions, thus putting Powell in a position to put a ceiling on near term rate expectations (rather than comment on how quickly rates might move lower). His speech certainly delivered said ceiling and also stayed clear of signaling any low rate exuberance.
2 weeks 6 days ago
Checkout newsModest Bounce For Mortgage Rates
After moving lower for 4 straight days to hit the 3rd lowest levels in more than a year, mortgage rates bounced just a bit higher today. This was the first day of the week with meaningful economic data and the bond market (which dictates rate movement) frequently takes cues from such data. In today's case, the data was generally not helpful for rates because it failed to show any dire warning for the state of the economy. Weekly Jobless Claims continued to operate in a historically normal range and, in separate data, a closely watched index on the health of the services sector came out stronger than expected. The bond market lost ground after those reports, in addition to modest losses that occurred during the overnight session. As a result, mortgage lenders were forced to nudge rates just a bit higher compared to yesterday's latest levels. All that having been said, instead of being the 3rd best day for rates in over a year, today is merely the 4th best.
3 weeks ago
Checkout news3rd Best Day For Rates in Over a Year
Although the day to day changes in mortgage rates have been modest recently, the slow and steady improvement has brought the average top tier 30yr fixed rate back near the lowest levels in more than a year. Apart from 2 days earlier this month, rates are as low as they've been since May, 2023. There were no significant sources of inspiration for today's market movement although there was some volatility surrounding the release of updated payroll figures for extremely old labor market data. The Quarterly Census of Employment and Wages (QCEW) is the closest thing we have to a "final answer" to the questions that are asked every month regarding the number of jobs in the U.S. economy. While it has far more coverage than the monthly jobs report, it sacrifices timeliness. Today's revisions covered April 2023 through March 2024--ancient history when it comes to a financial market that is looking for real-time indications of labor market softening. Nonetheless, some market participants would argue that a downward revision--stale though it may be--at least does nothing to hurt the case for lower rates. That said, it will be the more timely economic data that actually dictates the momentum between now and the Fed meeting in about a month.
3 weeks 1 day ago
Checkout newsMortgage Rates Edge Lower Yet Again
File today under "nice." While it wasn't amazing, significant, or even the byproduct of any interesting events, mortgage rates managed to drift modestly lower, ultimately matching their lowest levels since August 5th. The lowest rates in just over 2 weeks might seem like it's worth more enthusiasm, but we didn't learn anything new about the current trends that we didn't know yesterday. Simply put, there was a ton of rate volatility earlier in the month and we've been in a slow, largely sideways grind since then as we wait for more compelling motivations. The average lender remains near 6.5% for a top tier, conventional 30yr fixed scenario.
3 weeks 2 days ago
Checkout newsMortgage Rates Move a Hair Lower to Start The New Week
After the intense volatility seen earlier in August, the average change for mortgage rates on any given day has been shrinking. Last week was a mere shadow of the former week which, in turn, was nowhere close to the week before that. If Monday is any indication, the present week will attempt to keep that trend going. The average lender offered slightly lower rates compared to Friday's latest levels, but that has just as much to do with bond market strength on Friday (which wasn't early enough or big enough to result in widespread rate improvements. Top tier conventional 30yr fixed rates continue near the 6.5% mark. In terms of scheduled events, there are no major volatility risks until the end of the week.
3 weeks 3 days ago
Checkout newsRates Are Settling Down After 2 Wild Weeks
Mortgage rates had a much calmer week this week compared to the previous 2. The average top tier 30yr fixed rate held a fairly narrow range between 6.49 and 6.58, with Friday's latest move being a decent drop back to 6.56%. Contrast that 0.09% range to the previous two weeks, which saw ranges of 0.29% and 0.41%! The volatility is a byproduct of the market honing in on the likely path of economic data heading into the September rate announcement. The market is 100% convinced the Fed will cut by at least 0.25%. Earlier in the month, a majority of traders thought it would a 0.50% cut and some were even calling for an immediate emergency cut of 0.75%. That drama was based on the lackluster jobs report at the beginning of the month. Since then, the weekly jobless claims updates (separate data) have painted a less dire picture for the labor market--an important development considering the Fed is increasingly comfortable with inflation progress and instead focusing more attention on jobs. In the coming week, investors don't have nearly as much data to digest as the past 3 weeks, but there's an important speaking opportunity for Fed Chair Powell on Friday morning at the Jackson Hole Symposium. One day earlier, there will be another chance for weekly Jobless Claims numbers to either stick to the same old script or to suggest that things may indeed be shifting (something that looked like it might have been happening 4 weeks ago as seen in the red line in the following chart).
3 weeks 6 days ago
Checkout newsRates Jump Higher After Upbeat Economic Data
Mortgage rates had moved a bit lower since their most recent high last Thursday. By yesterday afternoon, the average lender had moved down to 6.49 from just under 6.63 for a top tier conventional 30yr fixed purchase. After this morning's economic data, almost all of that improvement was erased. There were 5 separate reports in the 8:30am ET time slot, but 2 of them did all the damage. Retail Sales came in at 1.0% for the month of July, compared to a median forecast of 0.3%. Stronger sales implies a stronger economy and higher rates, all other things being equal. The other report was less of an obvious problem for rates at face value, but arguably at least as important to traders responsible for bond market movement. Weekly jobless claims numbers were modestly lower than expected (227k vs 235k forecast). While this doesn't seem like a big deal, this timely labor market data is being closely watched in order to validate or reject the idea that the jobs market is cooling as much as the last big jobs report suggested. One reason to pay extra attention to every little piece of labor market data is the fact that the Fed has explicitly said the labor market is occupying more of its focus as it considers when to cut rates and by how much.
4 weeks ago
Checkout newsMortgage Rates Dip Back Below 6.5%
Today brought the release of important economic data with the power to cause a sharp increase or decrease in mortgage rates. There are a wide variety of economic reports that guide investors as well as Fed policy (which in turns has an impact on investor decisions). All of the above makes for movement in the bond market which, in turn, drives day to day changes in interest rates. Some reports are more relevant than others when it comes to their potential rate impact and today's Consumer Price Index (CPI) has frequently caused the biggest swings on any given month. August will not be one of those months as today's installment was right in line with the market's expectations, resulting in exceptionally tame market/rate movement (for a CPI day anyway). Bonds managed to improve modestly, resulting in the top tier conventional 30yr fixed rate index dipping back under 6.5% by a hair. From here, other economic data can and will leave a mark, for better or worse. Tomorrow morning's Retail Sales data now becomes the biggest volatility risk for the present week. But it's not until the jobs report in early September and the next CPI report the following week that we'll get back to top tier data.
4 weeks 1 day ago
Checkout newsMortgage Rates Continue to Recover, But We Could See Big Moves Tomorrow, Depending on Data
If you're just here to keep an eye on daily changes in mortgage rates, today was solid. There was a modest improvement versus yesterday and the average lender is almost perfectly in line with 6.5% when it comes to top tier conventional 30yr fixed rates. For those interested in more of the nuts and bolts, today's improvement came in response to a lower-than-expected reading in this morning's key economic report, the Producer Price Index (PPI). PPI measures inflation at the wholesale level and occasionally has a fairly decent impact on rate when the results are much higher or lower than forecast. Today's results were lower. Bonds/rates hate inflation. As such, rates improved after these results. But there is another inflation report that packs a much bigger punch than PPI and it will be out tomorrow morning. The Consumer Price Index (CPI) measures inflation at the retail level. Along with the similar PCE inflation that will be out in 2 weeks, CPI represents the inflation metric that the Federal Reserve would like to see at 2%. To be clear, year over year core inflation has no chance of hitting 2% tomorrow, but monthly inflation readings would merely need to keep doing what they've been doing in order for the Fed to be convinced that 2% annual inflation is a near certainty. There's no way to know ahead of time whether the data will be friendly or damaging--only that CPI is responsible for some of the biggest spikes and drops over the past few years.
4 weeks 2 days ago
Checkout newsMortgage Rates Effectively Unchanged to Begin New Week
Today was completely different than the previous Monday in that it was a normal, boring day with essentially no change in mortgage rates over the weekend. Contrast that to last Monday which saw an extension of an already wild run to the lowest levels in more than a year. Since last week, the rate market has corrected back into the lower portion of the prevailing range (as opposed to the super low portion, as seen at the beginning of last week and the end of the previous week). In other words, if you'd left town on August 1st and returned today, you'd still be seeing the lowest rates since April 2023. The average lender remains in the mid 6's when it comes to top tier conventional 30yr fixed scenarios. This could change in the coming days as important new economic reports are released. Wednesday's Consumer Price Index (CPI) is the biggest deal, but tomorrow's Producer Price Index (PPI) could play a supporting role. As always, there's no way to know which way rates will move in response to an economic report ahead of time.
1 month ago
Checkout newsMortgage Rates Finally End This Week's Losing Streak
After starting out at the lowest levels in more than a year on Monday morning, mortgage rates had done nothing but increase through Thursday afternoon. The bounce was abrupt by typical standards with the average 30yr fixed rate rising nearly 0.3% in just 3 days. Friday brought a small amount of relief as the underlying bond market finally leveled off. Mortgage rates are based on bonds and bonds take cues from several sources. One key motivation is the level of "supply." In other words, "how many bonds are being sold." Supply in non-mortgage-specific bonds still has an impact if the bonds are closely related. Reason being, if investors are compelled to buy lots of bonds, the yield (aka "rate") generally needs to move higher to garner sufficient demand. This was the case this week as it related to US Treasury auctions. Mortgage-backed bonds stick to a very similar path compared to their Treasury counterparts. As such, rates/yields moved higher across the board. With all that in mind, Friday would have been the least surprising day to see an end to the mini upward spiral in rates because it was the first day without a big new Treasury auction for the week. It also saw the lowest supply of corporate bond issuance (another category of bonds that can put some upward pressure on rates amid moments of excess supply). In the week ahead, the market's focus will shift from supply back to economic data. Next Wednesday brings the release of one of the most important economic reports, the Consumer Price Index (CPI). This is the first major measurement of inflation for the month of July. If it confirms the friendly trends established in May/June, it would likely reinvigorate the recent downward pressure on rates seen last week. But there's an equal chance the data disappoints to the upside, thus causing further rate increases in the short term.
1 month ago
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