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August 2, 2024
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August 2, 2024
Interest Rates DROPPED to the Lowest Levels of the Year!
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Buckle your seatbelts! Interest rates have dropped to 6.4% on a conventional loan and are now ALMOST 6% for FHA and VA loans!
What does this mean? If we go back to April 30, 2024, rates were 7.52%. In just a 3-month period, interest rates have dropped by over 1% and now stand at 6.4%. Simply put, this translates to a $337/month payment savings on a $450,000 mortgage. It has increased the buying power for an individual by over $50,000!
Instead of a buyer having to look at $400,000 homes, they may now have the opportunity to look at $450,000 homes.
Why the drop in interest rates? Today saw the release of the BLS (Bureau of Labor Statistics) jobs report. The BLS jobs numbers came in at 114,000 new jobs, well below expectations of 185,000. The unemployment rate jumped from 4.1% to 4.3%, which is above the Fed's maximum target of 4.2%. There is now some chatter that we could be in a recession.
Inflation also continues to moderate, and there is no indication of anything that will derail the decline. The Fed's desired inflation rate is 2%. The Fed primarily looks at PCE (Personal Consumption Expenditure) as their primary inflation index, which stands at 2.5%. The CPI (Consumer Price Index) is their secondary measure, which is at 3.0%. These indexes are weighted heavily by estimated rents, which have been coming down and are not fully reflective of the current conditions.
Another inflation measure is Truflation. Truflation looks at 18 million data points compared to the roughly 80,000 data points in the CPI and PCE. Guess what the Truflation index shows? Inflation is at 1.5%, BELOW the Fed's target. It’s time to cut the Fed Funds rate!
The Fed decided to keep the Fed Funds rate the same this week but indicated they were very close to starting to reduce the rate. Right now, it is almost certain they will lower it at the September 17-18 meetings. The new question is: how much will they lower it? Will it be 0.25% or 0.5%? Odds are now favoring a 0.5% reduction.
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The information contained is the viewpoint of the presenter(s). Individuals should consult their own financial representative.
Estimated Mortgage Payment is for exemplary purposes only. Contact a licensed loan officer for exact numbers and APR. Additional rates and terms may apply and are subject to change without notice. Loan scenario assumes a purchase price of Zillow's list price and a 10% down payment. Points and fees not included. Property tax, homeowners insurance, mortgage insurance, and HOA fees are approximate and may vary. Other fees may apply. Product displayed is a conventional 30-year fixed rate mortgage using the current average rate as shown on Mortgage News Daily (mortgagenewsdaily.com).
Estimated Qualifying Income assumes a homebuyer has a FICO score above 740, no other credit debt, and a debt-to-income (DTI) ratio of 43%.
For exact numbers and APR or to run a loan scenario based on your own credit and income, contact our office at (858) 259-8700.
Rate Source: Mortgage News Daily. Rates displayed are approximate, subject to change, and do not necessarily reflect rates available to you. MND’s methods involve an objective component based on lenders' raw prices as well as a subjective impression from their network of originators. For more information about how these rates are calculated, visit www.mortgagenewsdaily.com/mortgage-rates/about.
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Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call (858) 259-8700 for details. All borrowers must meet minimum credit score, loan-to-value, debt-to-income, and other requirements to qualify for any mortgage program. CrossCountry Mortgage, LLC is an FHA Approved Lending Institution and is not acting on behalf of or at the direction of HUD/FHA or the federal government. CrossCountry Mortgage, LLC is not affiliated with or acting on behalf of or at the direction of the Veteran Affairs Office or any government agency. Certificate of Eligibility required for VA loans. By refinancing, the existing loan total finance charges may be higher over the life of the loan.
