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Today’s Mortgage Rates in Oct 2024
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.
Sept 16, 2024
Mortgage rates should continue to trend lower in the longer term. We continue to suggest floating for loans with longer closing dates.
Inflation is Cooling Off – Finally! 🧊
Last week’s Consumer Price Index (CPI) report showed that consumer inflation is now down to just 2.5%. This is a significant improvement from when price increases clocked in at 9% during the peak of the inflationary cycle. With inflation rates coming down across the globe, central banks are nearing a point where they can claim victory against the battle of rising prices, and allow interest rates to fall to more normalized levels. Also bringing relief to American consumers was Brent Crude oil again falling beneath $70 a barrel. While this is a strong signal that inflation is in fact coming down, it will also bring additional savings at the gas pumps in the months to come.
Fed Cuts Incoming? ✂️ The Wait is Over
For the first time in 4 years, the Federal Reserve is set to cut interest rates this Wednesday. There is still no clear opinion as to whether we will see a 25 basis point cut or a 50. There are still signs showing that while the US economy is slowing, we are not yet in a clear path towards a recession. For that reason, a 25 basis point cut is what most are expecting at this point.
However, because current Fed policy is far more restrictive than it should be for the current level of economic impact, I feel odds slightly favor a 50 point cut. While this cut is not expected to bring immediate relief to consumers who are currently struggling to keep up with current interest costs, it is an initial move that will continue to improve borrowing costs in the months, if not years, to come.
Behind the Numbers: What’s Really Driving Inflation? 🔍
A deeper look at last week’s CPI report shows that while inflation is still slightly above what the Fed would like to see, when you exclude automobile insurance and lodging alway from home, we have virtually zero real consumer inflation. Since car insurance inflation has risen sharply due to recent acts of nature, there is little that a higher Fed Funds rate can do to slow insurance premiums. Also, higher rates have created a housing market with inadequate supply of existing homes for sale to meet buyer demand. This is not expected to change until mortgage rates fall to a point where people will consider giving up their 3% rate. Hopefully, the fed is understanding this dynamic and understands that aggressive rate cuts are justified, and are the only pathway to accomplishing their goal of a soft landing.
Sept 09, 2024
Bond yields have attempted to break beneath a critical floor. However, the attempt was quickly rejected, and rates were pushed back up a little higher. We feel there is a good chance that longer term we will continue to see rates improved. If you need to close in the next few days, now is a great time to lock. If you have a longer horizon, you could benefit by continuing to float.
Yield Curve Flip: Is the Recession Alarm Ringing?🚨📈
After being inverted since June 2022, the 10-Year Treasury Note yield traded higher than the 2-Year. This is a significant move since most recessions since World War II followed a similar pattern where an inverted yield curve flipped to normal just before the recession hits. The inversion correction followed the Labor Department released a report showing that new job openings fell sharply from the month prior, and by more than the market anticipated. This news added fuel to the belief that our job market is starting to weaken, which could trigger the Fed to be more aggressive in their rate cuts.
Mixed Signals from the Jobs Front: What’s Going On?🧐📊
Friday’s Bureau of Labor Statistics (BLS) report provided mixed messages on the strength of the US labor market. While the number of new jobs created came in below expectations at 142,000, the prior two months’ reports were also revised lower by a combined 88,000 jobs. However, the unemployment rate fell from 4.3% down to 4.2%. Also showing strength, average hourly earnings rose .4%, which was higher than the .3% the market anticipated, taking the annualized rate from 3.6% up to 3.8%. The conflicting reports did little to provide assurance that the Fed will be cutting by 50 basis points.
Inflation Watch: CPI Report is Coming Up🔍🔥
Next week, we will get another reading on consumer inflation, with the Consumer Price Index (CPI) report set to be released on Thursday. Although this is not the Fed’s preferred measure of inflation, it will be the last reading we receive prior to the Federal Reserve’s interest rate announcement on September 18th, where the debate remains not whether the Fed cuts rates, but by how much rates are cut. At this point, odds slightly favor a 50-basis point cut. However, if the Fed only cuts by 25, the bond market could react negatively, which would add upward pressure to rates.
Sept 03, 2024
After rates moved a bit higher last week, we are at a point where we should see rates soften a bit. Just be careful going into Friday’s labor report. We could see volatility more rates in one direction or the other depending upon the results.
🏠The Great Waiting Game: Millennials & Gen Z on the Sidelines
Pent up demand for young people who feel they have been priced out of homeownership due to high interest rates and record home prices continues to grow. In fact, right now we have the highest number of young Americans living with their parents since the 1940’s. The concerning thing is that even a 2% drop in rates from their recent peak has not spurred the buying frenzy that many expected. It seems that most buyers remain sidelined just waiting for rates to fall further. Of course, the risk to this is that home values have continued to climb higher, making waiting even more costly than buying at a higher interest rate with the plan to refi as rates fall.
💰Solar Power, Zero Down: The HOPER Program is Here
A new program to help more homebuyers with a down payment to be able to purchase a home is spreading wildly through the real estate market in key states, including Utah. It has limited availability and is only offered through certain mortgage companies. It is called the HOPER Program, which provides up to a $13,000 payment towards the purchase of a home to homebuyers who are willing to participate in an educational process that is geared towards teaching financial literacy and to reduce mortgage defaults. The key restriction is that a solar system must be added to the home, which is 100% financed into the mortgage. At that point, the buyer owns their power, without a separate loan or lease agreement. If you would like to learn more, or find a mortgage lender who offers the program, just respond to this email.
🎢Fed’s Tightrope Walk: Soft Landing or Economic Rollercoaster?
While most economists continue to believe that the Fed will pull off a “soft landing,” many still see significant risks that could lead to a prolonged economic slowdown in 2025. Economic reports are showing mixed signals, with some supporting the need for rapid rate cuts, and others pointing towards a continued thriving economy at today’s high rates. Friday’s Personal Income Expenditures report, for example, showed that inflation grew at a .2% pace in the month of August. This is still hotter than the Fed would like to see, which adds concerns to a Fed who would love to be able to cut rates. The next major milestone will come on Friday when the Bureau of Labor Statistics releases their estimates of new job creations. If that report is strong, we can bet on the Fed cutting by only ¼%. However, a weak report could lead to a ½% cut when the Fed meets on the 18th.
Aug 21, 2024
Rates have improved the past few days. While we are on a downward trend, it could be prudent to float on longer term transactions while watching the market closely in case there is news reported that rocks the markets.
Retail Therapy or Red Alert? 🛒
Retail sales in July pulled a fast one on the market, clocking in at a 1% jump—more than triple the expected 0.3%. But before you sound the inflation alarm, here’s the catch: June’s numbers were quietly revised downward, and back-to-school shopping gave July an artificial boost. When you zoom out and look at the 12-month run rate, we’re seeing a much tamer 2.7% increase. In other words, the retail world might not be as red-hot as it seems.
Jackson Hole: Where the Financial Elite Meet ✈️
If you were thinking about taking a private jet to Jackson Hole this week, the private airport may be full, as the beautiful town of Jackson is filled with some of the most influential financial policy makers, academics, and media experts. It’s the week where they come together to discuss economic conditions, financial development, policy issues, and how they will impact the decision of our central banks. The headline speech will be on Friday, when Fed Chairman, Jerome Powell, takes the stage to share his thoughts and insights surrounding the Fed and its policies moving forward. Since the Fed is expected to start cutting rates in September, this year’s meeting is much less concerning than the previous meeting in 2023.
Job Report Oops! The Labor Market Overhype 💼
Turns out the job market wasn’t as booming as we thought. The Bureau of Labor Statistics just admitted that they overshot job growth numbers by a whopping 818,000 from April 2023 to March 2024. That’s nearly a third of the reported gains that never happened. This overestimation has had a ripple effect, pushing mortgage rates higher than they needed to be. If the BLS had gotten it right the first time, we could’ve seen lower rates and a more relaxed Fed. Here’s to hoping future numbers are a little closer to reality.
Aug 13, 2024
Rates are currently on a slow downward path. Wednesday’s CPI report could change this. If you feel like taking a risk, float into the CPI report. However, if you are not comfortable taking risks, now is a good time to lock.
🚗The Fed’s Tug-of-War: Gas Pedal or Brake?
The Federal Reserve’s balance sheet runoff plan (Quantitative Tightening – QT) is now garnering attention, as economists debate whether the Fed will continue to allow their holdings of US Treasuries and mortgage-backed securities to fall off their balance sheet, or if they will change their policy to reinvest 100% of the proceeds back into the bond market.
If the Fed is cutting rates to stimulate the US economy to help avoid a recession, it would not make sense for the Fed to continue to allow assets to roll off their balance sheet. This would be the equivalent to driving with one foot on the brake and one on the gas pedal. However, if the Fed it cutting to help bring interest rates to a more normal level, then QT could continue. Placing an end to the roll-off QT plan would be great news for mortgage interest rates, as this creates additional liquidity in the bond markets.
📊CPI Watch: Will Inflation Chill or Keep Us Sweating?
This Wednesday’s Consumer Price Index (CPI) report will provide an update on the pace of consumer inflation in the month of July. With the Fed being “data dependent,” markets trade heavily based on each significant inflation report. We have now had a few months of reports showing that the pace of inflation is slowing. If we can again support this trend with a reasonable CPI report, expectations of a Fed rate cut in September will strengthen, which could help mortgage rates take another step lower. With the general market consensus expecting to see a .2% increase in both the Headline and Core rates, it may take a reading of .1% or lower to spark continued hopes of a deeper rate cut beyond the .25% most are now expecting. With motor vehicle insurance already climbing at a 19.5% pace, this could be one area where we see a better-than-expected report.
🔮 Goldman Sachs’ Reality Check: Recession Odds on the Rise
Goldman Sachs has increased their odds of a recession to a 41% probability. While still not a high probability, it is a significant move from the 29% chance they had assigned back in April of this year. Our economy is digressing at a faster pace than most believed just a few months ago. If this trend continues, we can expect to see the Fed cut rates at a faster pace than planned, and for mortgage interest rates to fall more rapidly than anticipated.
