Mike's Daily Rate Commentary | Home Loan Mortgage

Today’s Mortgage Rates in February 2024



Mortgage Mike
Mortgage Mike
February 23, 2024 | 14 Minute Read

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.

 

Jan 29, 2024

The fate of mortgage rates remains intertwined with the 10-Year Treasury Note’s yield. Until a breakthrough beneath its 200-day moving average occurs, floating holds minimal advantage. However, a potential showdown around this critical level today might offer room for improvement if successful.

Fed’s Dilemma and Anticipated Rate Cuts 🏦💹📉

This week’s Fed meeting holds the key to deciphering the path ahead. Initial expectations of a March rate cut now waver, introducing uncertainty. While a cut isn’t expected, Chair Powell’s insights, likely tempering expectations for March, could influence near-term mortgage rates. The backdrop of a robust consumer and tight labor market poses resistance to cuts, shaping the Fed’s stance.

Geopolitical Tensions and Rate Dynamics 🌐⚖️💰

The tragic attack in Jordan, resulting in the deaths of three US servicemen, raises concerns about heightened tensions. President Biden’s vow to retaliate adds an element of uncertainty. Typically, global uncertainty pushes rates lower, but the geopolitical ties to oil-producing nations might induce unexpected effects. The situation merits close observation for potential impacts on interest rates.

2024 Rate Projections and Real Estate Dynamics 📊🏡📉

After three years of rising mortgage rates, 2024 is poised for a reversal. Forecasts predict a substantial 1% drop, following a 1.5% decrease from peak levels. This shift, expected to stimulate existing homeowners, addresses the high borrowing costs that impacted home sales in 2024. While unlocking many might necessitate rates in the 5’s, the market anticipates a slow start in 2024, gaining momentum in the latter half.

 

Jan 26, 2024

Mortgage rates have stagnated, with the 10-Year yield persistently above its 200-day moving average. The lack of improvement suggests limited benefits to floating. Until yields break below this critical level, anticipating meaningful shifts in mortgage rates remains challenging.

PCE Report and the Fed’s Inflation Balancing Act 🔄📊🏦

Today’s release of the Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge, indicates a growth of 0.17% in the Core rate for December. This brings the annualized inflation rate to 2.9%, inching closer to the Fed’s 2% target. Achieving this goal requires sustained growth in the Core rate, posing a challenge for the Fed in determining the extent of rate cuts needed from current levels. Anticipated cuts in March may set the tone for a gradual reduction throughout 2024 and beyond.

Consumer Spending Surge and Future Debt Considerations 📈💳💸

December witnessed a robust 0.7% increase in consumer spending, surpassing the market’s 0.4% expectation. However, the nature of December as a high-spending month, often fueled by credit card debt, prompts a cautious interpretation. The aftermath could see consumers prioritizing debt repayment over future expenditures, impacting spending patterns in the upcoming months.

Leading Economic Indicators’ Signal and Recession Predictions 🚨📉🗓️

The Conference Board’s Leading Economic Indicators report, registering a decline once more, completes a 21-month streak signaling potential recession. Projections hint at a recession hitting in Q2 of 2024, with the formal declaration potentially delayed until Q4 due to the timing of recession acknowledgments.

 

Jan 22, 2024

Following recent fluctuations, mortgage rates may have found support. We’ll cautiously float, monitoring market stabilization.

Government Funding Limbo and Temporary Measures ⏳🏛️

The federal government is on the verge of passing another temporary spending bill, averting a potential shutdown and extending government operations until early March. This recurring cycle of short-term solutions reflects the ongoing struggle to reach a consensus on a permanent budget. The deadlock, fueled by the unwillingness of extremes within the major parties to compromise, may persist before a longer-term plan is agreed upon.

Mixed Economic Signals Amidst Predictions 📉📈💼

Mixed messages surround the outlook for the US economy in 2024. With stocks near all-time highs, US jobless claims hitting a year-long low, robust retail sales, and a downward trend in inflation, the argument for an imminent recession weakens. However, influential economists like Jason Cummings, Chief Economist at Breban Howard, maintain a recession is on the horizon. Cummings attributes this potential downturn to the impact of high-interest rates on the labor market. Should a recession materialize, it could lead to more substantial mortgage rate declines than initially anticipated, presenting an opportunity for prospective homebuyers.

Golden Cross and Indicators of Rate Trends 📈📉📊

A notable technical analysis indicator, the Golden Cross move, occurred as the 50-day moving average crossed over a longer-term trend line—an optimistic sign for interest rates. The direction of mortgage rates in the near term hinges on the results of Friday’s Personal Consumption Expenditures report. A continuation of lower consumer inflation trends would favor the longer-term trajectory of rates.

 

Jan 18, 2024

As we assess the current landscape, the 10-Year Treasury Note yield remains above its 200-day moving average—a less favorable sign for the immediate trajectory of mortgage rates. Unless we witness a retreat beneath this critical level, the outlook for lower rates in the short term appears limited.

The Unyielding Strength of the US Economy 💪📈

Despite the Federal Funds rate reaching heights unseen since 2001, the US economy continues its remarkable growth. Achieving a return to a normalized interest rate environment hinges on further signs of inflation receding to its 2% target. However, with unemployment at historic lows and consumer spending robust, achieving this balance proves challenging. A possible alternative approach could involve higher taxes and lower federal spending—options met with mixed reactions in our politically divided landscape.

Labor Market Prowess and Inflationary Implications 📈🛠️💼

The labor market once again showcased its strength with new unemployment claims plummeting to a remarkable 187,000, the lowest since September 2022. This figure is far from the 320,000 threshold that would signal the Federal Reserve breaking the back of the labor market. A robust labor market, while a positive economic indicator, adds inflationary pressures due to increased consumer demand. This reduces the likelihood of a rate cut at the upcoming March meeting, indicating that higher rates may persist.

Builder Optimism 🏗️🏡📈

Builder optimism is on the rise, propelled by the recent decline in mortgage interest rates, as reported by the National Association of Homebuilders. This bodes well as we enter the higher construction months, offering hope for increased inventory in a housing market hungry for supply.

 

Jan 16, 2024

With the 10-year breaking its 200-day moving average this morning, we’re adjusting our stance to a locking bias. Let’s keep a close eye on developments, hoping it doesn’t close the day below its current position.

Glimpses of a Bullish Housing Run 🏡📈🐂

As we embark on 2024, a “soft landing” is still questionable…

Current indicators showcase a robust labor market, a slowing inflation growth rate nearing the Fed’s 2% target, and a confident consumer base eager to spend. Should the Fed initiate rate cuts, anticipated as early as March, the housing market might experience a surge as affordability improves for first-time homebuyers. Moreover, those hesitating to trade their 3% mortgages for higher rates seem to be reconsidering, offering promising prospects for a housing market bull run.

Rafael Bostic’s Cautionary Rate Expectations 📉🎙️📈

Rafael Bostic, a current Fed voting member, cautions that the market’s optimism on rate cuts might be premature. He emphasizes the need for consumer inflation to firmly approach 2% before rate cuts can be considered. This cautionary note is contributing to upward pressure on mortgage interest rates. Concurrently, the 10-Year is grappling with its 200-day moving average. If this threshold holds, we can anticipate a gradual decline in mortgage rates. However, breaching this level could delay the expected improvement in rates in the short term.

Manufacturing Challenges and Economic Realities 🏭💡📉

Today’s NY Manufacturing Index for January revealed a concerning reading of -43.7, well below the market’s -5 expectations. This puts the manufacturing sector in a recession, echoing economic struggles. The report, when excluding pandemic impacts, reflects the most challenging conditions since 2001.

Jan 11, 2024

Mortgage rates remain in a right range. As long as the yield on the 10-Year Treasury Note remains beneath its 200-day moving average, we will maintain our floating bias.

Inflation Unmasked: The December Dance 💃

This morning’s Consumer Price Index (CPI) report showed that consumer inflation rose by .3% in the month of December, which exceeded the markets’ expectations of a .2% rise. The key issue with giving weight to any December economic report is the reality of how skewed the data truly is. December is the month where people travel to be with friends and family, spend at restaurants, while blowing more money than they have at retail stores. Further, corporations throw lavish parties and pay out year-end bonuses.

Of course, this will reflect in high demand, strong labor growth, and an uptick in prices. Thankfully, investors seem to be understanding this dynamic and are widely ignoring the stronger than anticipated report.

Home Sweet Home: The Rise of Affordable Rates 🏡

With mortgage rates trending lower, economists are taking a bullish stance on the housing market. It is expected that we will see a surge of buyers who were sidelined due to a lack of affordability brought on by high rates. Many are also anticipating that we will see a much-needed increase in new listings as rates get closer to 5%. While many were unwilling to trade their 3% rate for a home when rates were at 8%, they will be more willing to accept 5% for the benefit of moving. We can also expect to see refinance activity jump as people who purchased at high rates look to lower their housing expense, as well as others looking to consolidate their high interest rate home equity loans and other consumer debt for a fixed 30-year mortgage.

Granting Dreams: A 3.5% Downpayment Fairy Tale ✨

The availability of a recently offered grant program that pays for the entire 3.5% downpayment on an FHA mortgage is suddenly attracting a lot of attention. This new product provides a forgiven grant, so there is never a concern of having to pay it back at some point down the road. If you or someone you know is wanting to purchase but does not have a down payment, respond back to for more information. There are zero income limits for most buyers, making this a unique and attractive option for many.