Mike's Daily Rate Commentary | Home Loan Mortgage

Today’s Mortgage Rates in March 2024



Mortgage Mike
Mortgage Mike
March 13, 2024 | 10 Minute Read

March 12, 2024

Unless we see consumer inflation soften and the labor market weaken, we can expect mortgage rates to be higher than most anticipated we would see throughout 2024. We will maintain a locking bias.

BLS Blunders: Jobs Surge, But at What Cost?

Friday’s Bureau of Labor Statistics (BLS) report showed that there were 275,000 new jobs created in the month of February. Before you celebrate the continuation of a seemingly explosive labor market, we need to consider the massive downward revisions of the prior two months. It seems that the BLS overstated the prior two months’ numbers by 167,000! When pressed for an explanation as to how this could happen, a member of the reporting team cited a “staffing shortage.”

Well, just give that a minute to set in. It’s also worth noting that mortgage rates likely increased by nearly ¼% from this mistake alone. Causing many borrowers to take higher rates based on false data. I’m not much of a conspiracy theorist, but the mistakes of the BLS the past couple of years has made me seriously question if there is more behind the story.

Inflation Inches Up, Fed Feels the Heat 🔥

This morning, we received an update on the pace of consumer inflation, with the Consumer Price Index reporting a .4% increase in the month of February, taking the annualized rate from 3.1% up to 3.2%. A move higher is certainly not good news for The Federal Reserve, or anyone who was hoping to see improvements to mortgage interest rates. When removing volatile food and energy prices, the Core rate also increased by .4%, moving the annualized rate from 3.9% down to 3.8%. We remain far from the Fed’s target of 2% Core inflation, which means that hopes of a rate cut in May are quickly evaporating.

The Curious Case of the Unemployment Rate 🤔

One interesting component of the BLS report is that unemployment rate, which is derived from a completely different metric than the job creation count. While labor market growth is derived from phone surveys of businesses collecting payroll information, the unemployment rate is computed by phone surveys to working class Americans. The phone survey painted a much weaker picture of the strength of the US labor market, which is why we saw the unemployment rate rise from 3.7% up to 3.9%.

 

March 05, 2024

Given the strength of the US economy, we suggest a locking bias.

Labor Market Limbo: How February’s Numbers Could Impact Your Rates🛠️

This week we will get reports on the strength of the US labor market for the month of February. Tomorrow morning, ADP will come out with their estimates, with the Bureau of Labor Statistics (BLS) set to announce theirs on Friday. Estimates for the BLS report are set at 200,000, which is a significant reduction from January’s report that showed that the labor market grew by 353,000.

Given the seasonal adjustments that helped create January’s blockbuster report, this could help the month of February report a much lower number. Since the Fed is set on slowing the labor market, a lower number could help support lower mortgage rates in the near term.

Debt Drama: Why Our National Debt Is Keeping Us Up at Night💸

Interest payments on our rapidly escalating national debt have now exceeded all the costs of Medicare plus our national defense combined. With nearly $1 trillion being added to our national debt every 100 days, we are clearly on an unsustainable path. Higher interest rates are not helping the overall problem, with the US Treasury now having to borrow money at multi-decade high rates just to keep our government floating.

While the excessive spending is helping our economy hold strong, it is providing a false sense of security. If we ever get our spending back to a reasonable level, we will see economic reports show more weakness than they are currently reporting. There will eventually be a day or reckoning, where our government is forced to cut spending, which would certainly help slow the pace of inflation.

Powell’s Prognostication: What to Expect from the Fed Chairman’s Congress Report🔮

Tomorrow morning, Fed Chairman, Jerome Powell, will provide a semi-annual Monetary Policy Report to Congress. Given the recent strength in economic reports so far in 2024, markets will be listening for any clues as to both when the Fed will begin to cut rates and how many cuts they anticipate in 2024. 

Hopefully, Powell attributes the recent strength to seasonal adjustments that generally show stronger than normal economic activity. However, I expect him to be clear that they will be waiting for lower inflation and job growth numbers before they begin the cutting process. Regardless, his words will likely cause interest rates to move in one direction or the other.

 

Feb 23, 2024

After hitting a critical level, mortgage bonds are showing signs of improving. We suggest carefully floating to give an opportunity to see if this improvement continues.

Homebuyer’s Heartbreak: The Unfolding Drama of 7% Rates🎭🏡

With mortgage interest rates now averaging above 7% nationwide, applications for both purchase and refinance loans have plummeted. This is terrible news for the spring homebuying season, where many buyers were hoping for a little rate relief to help push them into the decision to become homeowners.

The reason for the sudden jump in mortgage rates comes down to higher-than-expected consumer inflation rates combined with a white-hot US economy that has not yet relented under the pressure of higher interest rates. This news has lowered the probability that we will see the Fed cut rates anytime soon and reduces the number of cuts the market is expecting out of the Fed in 2024.

Jobless Claims Drama: A Plot Twist in Rate Expectations🕵️‍♀️💼

This morning’s Initial Jobless Claims data didn’t do much to help mortgage rates, with only 201,000 new claims reported last week. This is savagely unhealthy and shows that employers are holding on to their workers, or that workers are quicky finding replacement jobs after getting laid off. With additional rate hikes unlikely, the Fed is searching for ways to help slow the labor market with the tools remaining under their belt.

For one thing, it doesn’t help that the US Federal Government continues to spend money and create debt at record levels. This is counterproductive to bringing down inflation and is a big risk for mortgage rates in 2024. 

Home Sales: The Silver Lining Amidst Rate Storms🌪️🏠

Existing home sales for January were released this morning, showing encouraging signs of existing homeowners becoming more willing to part ways with their low mortgage rates for the opportunity to move to a more suitable home. However, we remain near a 4,000,000 annualized pace of sales, which puts us at low levels not seen since 1995. We know that as time goes on, we will see consumers adopt to higher rates. As we transition into a more normalized number, we will see improvement in the number of buyer transactions taking place.

 

Feb 13, 2024

Given the prevailing market dynamics, maintaining a locking bias remains prudent. With little benefit in floating amidst ongoing volatility, let’s stay vigilant and responsive to emerging developments.

S&P 500 Rally: Unprecedented Momentum 📈📊🔥

The S&P 500’s relentless ascent to record highs over the past four months, breaching the psychological 5000 mark, defies conventional expectations amidst interest rates’ 5% surge. This perplexing phenomenon, coupled with near-record low unemployment rates and historic wage levels, presents a fascinating case study for economists. For those of us in the mortgage and real estate sectors, the journey has been rife with challenges. Here’s to brighter prospects ahead.

CPI Surprise and Fed’s Conundrum 🛒💰💹

January’s Consumer Price Index (CPI) report delivered an unexpected blow, with both the headline and core inflation rates exceeding market projections. A month-over-month increase of 0.3% in the headline rate, coupled with a significant 0.4% uptick in the core rate, spells trouble for mortgage rates. As inflation stubbornly outpaces the Fed’s 2% target, their attempts to rein in price growth and consumer demand have yet to yield desired outcomes, complicating the path forward for rate cuts.

Small Business Uncertainty Amidst Strong Indicators 🏢🤔📉

The latest National Federation of Small Business survey for January reveals waning confidence among employers, signaling a potential economic slowdown on the horizon. However, this sentiment contrasts sharply with recent labor market reports and robust economic indicators highlighting strong consumer demand and labor shortages. A shift towards small business owners’ anticipated slowdown is crucial to stabilizing mortgage rates.

 

Feb 05, 2024

In light of a barrage of robust economic reports, mortgage rates have experienced a sharp ascent in recent days. With economic indicators signaling strength, we maintain a locking bias in response to the prevailing market conditions.

January’s Job Report: Unraveling the Numbers 📊💼📈

The recent Bureau of Labor Statistics (BLS) report painted a picture of robust job creation, boasting 353,000 new jobs in January, blowing past market expectations. However, the intricacies reveal a different narrative. A real loss of 2.635 million jobs underwent a seasonal adjustment of 2.998 million, ultimately resulting in the reported gain.

January’s report, characterized by guesswork, often leads to such pronounced swings.

Powell’s Cautionary Tone on Rate Cuts 🏦🤔💹

In a 60 Minutes interview, Fed Chairman Powell diverged from market expectations, expressing a cautious approach to rate cuts in 2024.

He emphasized the Fed’s deliberate pace, awaiting firm evidence of inflation’s descent to the 2% target… NOT at all what the market wanted to hear. This stance contradicts the anticipation of aggressive rate cuts, casting uncertainty on the immediate trajectory of mortgage rates.

Yield Volatility and Market- Fed Divergence 📈💱🏦

The yield on the 10-Year Treasury Note surged from 3.83% to 4.17%, propelling it above the 200-day moving average. Such a substantial upward move underscores the ongoing misalignment between Federal Reserve expectations and market sentiment.

Until a convergence occurs, expect continued volatility in interest rates.

 

Feb 01, 2024

Unless you have the appetite to risk higher rates if tomorrow’s BLS report is once again strong, locking today is the safe play.

Powell’s Plot Twist: No Rush for Rate Cut! 🤯

The Federal Reserve pulled back expectations of a March rate cut following yesterday’s rate and policy announcement, stating there is “no rush to reduce rates.” While acknowledging the progress the Fed has made in their fight against consumer inflation, Chairman Powell made it clear that the Fed members would like to see more certain indications that inflation is heading down to its 2% target.

However, he did essentially take fears of future rate hikes off the table, which at least helps provide the market with some assurance that the worst is behind us. Further, Powell stated that the Fed will also be having serious discussions regarding their reduction in the Fed’s balance sheet. This means that we could soon see more support from the Fed in its purchase of mortgage-backed securities and US Treasury bonds. Such move would help bring rates down more quickly as we progress further into 2024.

💸Keller Williams’ $70M Shakeup: Game Over in Commission Clash! 🔔

In a stunning move that is sure to send shockwaves through the real estate community, Keller Williams has given up on continuing to fight in the Sitzer / Burnett commission lawsuit. They have agreed to pay $70 million as a settlement, as well as informing franchisees that offers of buyer agent compensation are no longer required. 

In addition, they will be revising their training materials and end rules that require their agents to become members of the National Association of Realtors (NAR). This move will weaken a potential appeal to the guilty verdict among the remaining defendants and could force further settlement offers to help end the case.   

📊BLS Report Showdown: Mortgage Rates on the Line!⚖️

Although mortgage rates have been coming down the past week, tomorrow’s Bureau of Labor Statistics (BLS) report will truly set the tone for where rates go from here. While there are mixed messages on the strength of the labor market, the BLS reports as of late have proven detrimental to hopes of a slowing economy. Unless this report is weaker than the market anticipates, we may now be at a low point in mortgage rates in the near term.