Mike's Weekly Rate Commentary | Home Loan Mortgage

Today’s Mortgage Rates in Nov 2024

Mortgage Mike
November 14, 2024 | 14 Minute Read

Nov 14, 2024

Rates remain extremely volatile. We will maintain a locking bias.

The Election Hangover: Will Rates Calm Down Soon? 💸

With the results of the election now behind us, there is more certainty as to what the path ahead looks like. Interest rates moved higher over the past couple of months as odds started to favor a Trump victory. With much of that now priced into current rates, we hopefully will soon see the markets stabilize, which could allow interest rates to come back down a little. I’m hopeful that the move higher was over exaggerated, which would present the opportunity to have some relief in the weeks to come.

$25,000 Tax Credit is Off the Table—But Buyers Aren’t! 🏡

With the chances of a $25,000 first time homebuyer tax credit no longer at play, we can expect to see some potential homebuyers who were sitting on the sidelines make the next move towards homeownership. This could provide some hope for a small surge of buyers during the season where the home buying market is always slow. It is also the season where we see a reduction in the pace of home price appreciation, which could be a great benefit for those who are searching for a good deal.

Fed Fight: Independence or Influence? 🤔

The Federal Reserve has again been thrust into the spotlight, as President Trump pushes for the President to have more influence over the Fed policies.

Current Fed Chairman, Jerome Powell, has pushed back on this idea, saying that he will not leave office even if he is asked by the Trump administration to step down. Powell firmly believes in the Fed maintaining its independence from government control. However, the movement to put an end to the central bank has even attracted support from Trump ally Elon Musk. Given the Fed’s stated purpose of serving a dual mandate of balancing maximum employment while maintaining acceptable rates of inflation, many believe the Fed’s true purpose is to ensure that the US dollar remains the world’s currency. With such crucial stakes at play, the outcome is certain to have impact on our financial futures.

Nov 04, 2024

Mortgage rates continue to remain highly volatile. Until we have a better understanding of who will win tomorrow’s election, and how the market will respond to the chosen candidate, we can anticipate the volatility to continue. Locking remains the prudent strategy.

October Job Report: Not Exactly a Showstopper📊

Friday’s Bureau of Labor Statistics (BLS) report showed that there were only 12,000 new jobs created in the month of October, which is far below the 113,000 the market anticipated. The primary reason for the low report was due to the impact of recent hurricanes as well as large labor strikes that significantly cut the active payrolls for October. Adding to the weakness were 112,000 negative revisions to the combined August and September payroll reports, which has become a common practice for the BLS to do. The problem with this is that interest rates move higher on the initial reports, only to later learn that reality was far below what we have been told.

Jobless Rate Sticks at 4.1% – Fed Still Nervous😬

One of the key concerns with the labor market is the current low unemployment rate of 4.1%. The Fed has been clear that it would like to see this number tick in the 4.5% or higher range to help ensure we don’t have excessive wage growth that would push inflation higher. Unfortunately, this month’s BLS report showed that we are still at the 4.1% mark, which shows a labor market that is too strong for the Fed to feel comfortable.

In addition, wage growth was reported at .4% for the month of October, which would equate to an annualized pace of 4.8%. Again, this shows a level of strength in the labor market that exceeds the Fed’s comfort zone.

New Homes Still Holding Strong – But For How Long?🏠

While New Home Sales remain strong, they now represent 28% of total sales, which is down from the highs of 34.4% levels we saw in early 2022. However, we continue to remain well above historical averages of roughly 10%. This reflects the reluctance of existing homeowners who are locked in at low mortgage rates to sell their homes and purchase at today’s market rates. This will likely be the case until rates fall to a level where existing homeowners who are eager to move are able to get a rate that is more inline with what they consider acceptable.

Oct 28, 2024

There remains no end in sight to this savage increase in mortgage rates. Until we see the market stabilize, will maintain a locking bias.

It’s About to Get Real for Rates🎢

After mortgage rates have suffered a devastating 1% increase since the Fed cut rates nearly 5 weeks ago, the next 10 days are crucial to where mortgage rates will be in the weeks and months to come.

To begin with, Thursday brings the release of the September reading of the Fed’s favorite gauge of consumer inflation, the Personal Consumption Expenditures (PCE) rate, where the Headline rate of inflation is expected to show a mere 2.1% averaged rate over the prior 12 months.

Friday, the Bureau of Labor Statistics is set to release their estimates of job creations in the month of October. After a banner month of 254,000 reported in September, there is hope that October will come in at around 123,000.

Then, of course, we have the Presidential Election the following Tuesday, followed by the Federal Reserve’s announcement of any changes to the Fed Funds Rate that Thursday. All I can say is buckle up; the bumpy ride is not over.

Stocks Soaring 🚀 But Will They Crash?

Amidst the turmoil of the bond market, the US stock market continues to hit fresh all-time highs. Last week, fund investors helped drive this gain by adding $18 billion to their portfolios. This makes one wonder what they know that others don’t see. But, as the saying goes, “What can’t continue must end.” The unbelievable post-Covid run in the stock market at some point needs to come to a rest. When it does, that could help improve mortgage interest rates as investors seek a safe place to park their money.

Will the Fed Actually Cut Rates?🤔

While the Fed has projected another .5% of rate cuts in the final 2 months of 2024, markets are lowering their expectations based on the strength of recent economic data. As a result, many experts now believe the Fed will chose to hold rates are current levels when they meet next week. This recalibration is partially to blame for the rapid rise in mortgage rates the past five weeks. If we see a slow down in economic activity in the following 11 days, we could see mortgage rates improve as odds of a rate cut increase.   

Oct 21, 2024

After some improvement early last week, mortgage rates took a sharp turn higher. We’re currently at a critical juncture in the market. If rates don’t bounce back soon, we could see a more substantial rise in the short term. While the odds currently favor an improvement, the risk of floating remains high. Proceed with caution, and feel free to reach out if you need more guidance.

Retail Sales Show Resilient Consumer Spending 🛍️💪

Last week’s Retail Sales report revealed a 0.4% increase from the previous month, signaling that consumers continue to spend. Despite reports of struggling American families, economic indicators from September suggest otherwise. The month showed strong metrics in spending, earnings, and labor growth. With incomes now rising faster than inflation—which is near the Fed’s 2% target—many Americans appear to be doing well, at least on paper.

Rent and Housing Affordability Trends 🏠📉

Data from Core Logic indicates that rents are growing at a moderate pace of 2.4%, which is manageable. Meanwhile, incomes have increased at a faster rate, making rental housing more affordable for non-homeowners. For those who already own homes, many have locked in mortgage rates at 4% or lower, significantly lowering their house payment-to-income ratio. This translates to more disposable income for activities like vacations, dining out, and other leisure pursuits. Although high home prices and elevated mortgage rates make it tough for first-time and move-up buyers, a large portion of homeowners have minimal concerns about housing costs.

Impact of Recent Fed Rate Cut on Mortgage Rates 📉🔍

What has happened to mortgage rates since the Fed’s first rate cut in nearly five years? The short answer is that the rate cut had already been priced into mortgage rates before it even happened. Since then, strong economic data has raised doubts about whether the Fed will continue cutting rates as planned. The labor market is a key area of concern—unless the unemployment rate moves higher, we may see a floor for national mortgage rates around 5.75%, with City Creek rates potentially dropping to 5.375%. While rising unemployment isn’t ideal, it could provide relief for the mortgage and real estate sectors by bringing rates lower.

Oct 16, 2024

Since the Fed cut rates on September 18th, mortgage interest rates have increased by ½%. A look at the charts shows that the 10-Year Treasury yield is just beneath a strong ceiling of overhead resistance. We will suggest a carefully floating stance while we give the market time to see if this ceiling holds. If it does in fact break, we will switch back to a locking bias. Therefore, if you choose to float, do so only by keeping an eye on this critical level and have your loan in a position to be able to lock.

Oil Prices Are Sliding – What’s That Mean for You?⛽️

Oil prices have fallen once again to below $70 a barrel. This move lower was fueled by news that Iran has agreed to limit their retaliation plan to military targets. This is good news for mortgage interest rates, as higher oil prices are a precursor to higher levels of inflation. Since oil is one of the primary costs of producing and delivering goods, retailers and business owners generally pass the higher costs associated with rising gas prices on to the consumer.

On the downside, lower oil prices reduce job creations and investment into increased production of oil, as it becomes less economically viable for oil companies to create profits with prices this low.

Goldman Says: Recession? What Recession? 🚫📉

According to Goldman Sachs, odds of the US economy falling into a recession in the next 12 months are now at just a 15% probability. This is down from their earlier projection of 20% and supports the theory that the Federal Reserve has pulled off the nearly impossible task of accomplishing a soft landing. 

A “soft landing” for the Fed would be defined as bringing inflation down near their 2% target while maintaining strength in the labor market, and without the US economy falling into a recession. This gives the Fed the freedom to cut rates as a stable pace as it continues to monitor the balance of maintaining high employment and modest inflation at the same time.

CPI is Cool, but Not That Cool – Here’s What’s Up with Inflation 🏡📉

Last Thursday’s Consumer Price Index (CPI) report showed that headline number increased by .18% in the month of September and is now at 2.4% as an annualized rate. When removing volatile food and energy prices, the monthly gain was .31% and is now running at a 12-month clip of 3.3%. Since this has greater weighting on housing than the Fed’s favorite gauge of inflation, the Personal Consumption Expenditures (PCE) report, the CPI rate is running higher than the PCE.

When you look at just a six-month run rate, the CPI is at 1.6%, which is well below the Fed’s target rate of 2%. This gives the Fed the green light to continue to cut rates, as it appears that inflation is now under control.

Oct 07, 2024

Mortgage bonds have suffered substantial losses over the past week, and while we anticipate lower rates in the long term, the short-term outlook remains uncertain. Floating your rate is risky in the current environment, especially after such significant economic data.

Blistering Hot Jobs Report Adjusts Fed Expectations 🔥👷

The Bureau of Labor Statistics (BLS) delivered a red-hot September jobs report that has markets rethinking Federal Reserve rate cut expectations. 254,000 jobs were created in September, far exceeding the anticipated 140,000. On top of that, the previous two months saw upward revisions totaling 72,000, adding further strength to the overall report. The unemployment rate also ticked down from 4.2% to 4.1%, narrowly missing a reading of 4%.

This is troubling for mortgage rates, as the Fed has been pushing for higher unemployment to ease inflationary pressures. As a result, hopes for a 1/2% rate cut in November have all but vanished for now.

Wage Growth Continues to Fuel Inflation Concerns 💵⬆️

The BLS report also revealed that wages grew by 0.4% in September, higher than the anticipated 0.3%. With wage growth being a key driver of inflation, this spike in incomes raises concerns that inflation could rise even further in the coming months. And as we know, higher inflation is bad news for mortgage interest rates, which are already 1/2% higher than they were in mid-September. This inflationary pressure keeps mortgage rates elevated for the near term.

Dockworker Strike Ends, Easing Supply Chain Fears 🚢✅

The dockworker strike that halted operations last week has come to an end, with 50,000 workers now back on the job. After a brief but impactful three-day halt that prevented ships from unloading, the flow of goods has resumed. This resolution brings relief to supply chain fears just ahead of the holiday season. Had the strike dragged on longer, it could have caused significant inflation spikes and job losses as retailers, without inventory, would have been forced to cut back on labor.

Oct 02, 2024

While long-term rates are likely to fall, there’s significant risk in floating into Friday’s report. If you’re closing soon, the safer option would be to lock in your rate now to avoid potential near-term rate increases.

Inflation Cooling More Than Expected 🧊📉🏡

Last Friday’s Personal Consumption Expenditures (PCE) report brought good news on the inflation front. Consumer inflation grew by just 0.1% in September, bringing the annualized rate down to 2.2%. Stripping out volatile food and energy prices, core inflation also rose 0.1% month-over-month, with the annualized figure ticking up from 2.6% to 2.7%. However, when looking at the five-month annualized pace, Core inflation is running at 2.16%, which is close to the Fed’s 2% target. If we remove expenses like car insurance and housing, there’s virtually no inflation left in the economy—great news for the Fed. This sets the stage for mortgage rates to continue their downward trend in the months ahead.

Dockworkers Strike: Potential Inflation Spike ⛴️🚨

Tens of thousands of dockworkers have gone on strike, halting container traffic along the East and Gulf coasts from Maine to Texas. This marks the first shutdown in nearly 50 years, with significant implications. These ports account for over $4 billion per day in incoming products, ranging from cars to household goods. Such a major supply chain disruption threatens to drive consumer inflation higher, as supply shortages push prices up. Unfortunately, inflation is the arch-enemy of the mortgage bond market, meaning this situation could lead to higher mortgage rates. Let’s hope for a swift resolution to prevent further rate hikes.

Upcoming BLS Jobs Report: What’s at Stake 📊📈

This Friday’s Bureau of Labor Statistics (BLS) report could be pivotal in determining the near-term direction for mortgage interest rates. Recent labor data has shown a slightly stronger job market than expected, and the current estimate of 145,000 job gains for September may be too low. If job growth exceeds expectations, it could temporarily push mortgage rates higher.

Sept 24, 2024

While we could see rates fall in the weeks to come, there is little incentive to float in the near term.

Fed’s Cut Rates… But Why Are Mortgage Rates Still Climbing? 😤🏡

In a move that is frustrating many potential homebuyers, mortgage rate pricing has actually deteriorated since the Federal Reserve made a massive 50 basis point rate cut last Wednesday. While mortgage interest rates generally move in the same direction as the Fed, the two are not directly correlated. However, the Fed rate cut will help reduce interest expenses on variable rate home equity loans, car loans, and credit cards, which will bring immediate relief to consumers.

With the Fed increasing its expectations for additional rate cuts in 2024, we are seeing expectations for mortgage rates continue to fall in the months to come. This is likely to help mortgage rates continue their longer term slide lower.

Inflation Numbers Are Coming in Cool❄️

The big news of the week will hit on Friday, when the Fed’s favorite gauge of consumer inflation will be released. With the market expecting the Core rate of inflation to increase about .2% in the prior month, this is near what the Fed would like to see on a month over month basis. This is great news for Americans who have been dealing with elevated inflation after record supply chain issues created by Covid shutdowns.

The Fed is showing signs of fear that inflation may be falling faster than expectations. This means they are likely to shift their focus from inflation to ensuring the labor market remains strong. This will help increase odds that the Fed will achieve its goal of a soft landing. If that does happen, it will be a near miracle and something few economists believed could happen. 

Retirement Accounts Are Smiling 😊📈

It’s a good time to check retirement account balances, as the US stock market continues to see fresh all time highs. As the US economy continues to show strength, we seem to be in a Goldie Lox scenario where employment remains strong, inflation under control, and investment accounts rising.

Over time, additional Fed rate cuts will help reduce corporate borrowing costs, which will help increase profits and encourage corporations to borrow money to fuel additional growth. This could fuel additional gains to our longer-term retirement accounts.