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November 1, 2024
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November 1, 2024
The Rearview Mirror Tells It All
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Mortgage rates climbed above 7% this week on a 30-year fixed conventional mortgage, according to the Mortgage News Daily rate survey.
This was a jam-packed week of economic reports, including inflation data and jobs numbers. These are the two key drivers of interest rates.
The Fed’s favorite indicator of inflation, the PCE (Personal Consumption Expenditure), came out this week. For the most part, the inflation data was pretty tame and in line with expectations. The headline inflation dropped to 2.1%, which is almost at the Fed’s target of 2%.
The jobs data this week continues to be the thorn in the side of Wall Street. Last month, the BLS (Bureau of Labor Statistics) jobs report is what started the significant increase in interest rates. One report!
Mortgage rates have increased 1% since the low on September 17th, when they were at 6.11%! This increase has been difficult to accept and hard to justify.
Our team has conversations every single day with potential homebuyers, and what we hear is that many are not getting ahead and are just trying to keep up.
There is a lot of talk about wage increases offsetting the rise in inflation. This has likely helped to some extent. However, when people get a raise, they want to actually have a little more money to get ahead, go out for an extra dinner, buy the kids an extra toy for the holidays, or get some jewelry for their spouse. It’s not just to keep up.
The economy may not be as strong as it is often promoted to be, and it’s expected that rates will come down.
Back to the rearview mirror… for those who have been waiting on the sidelines, afraid and taking a “wait and see” stance, if you don’t make a move, you could be the ones looking in the rearview mirror yelling at yourself for not buying a home.
Remember, when mortgage rates drop, more buyers come to the market, and home values go up. Home values have increased this year despite the higher interest rates.
It is simply a supply and demand situation where there is plenty of pent-up demand not yet on the market and not a lot of home supply. And… there will still be limited home supply coming but at higher prices due to higher land values, building costs, interest carry, and regulatory expenses.
One more point to consider: pending home sales increased by over 5% month-over-month from August to September when interest rates were getting close to 6%. The 6% rate seems to be the tipping point, creating a surge in real estate market activity.
Interest rates will drop; it’s just a matter of when.
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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.
Mortgage News Daily (MND) is a trademark of Brown House Media, Inc. Zillow is a trademark of Zillow, Inc. CrossCountry Mortgage has not been authorized, sponsored, or otherwise approved by Brown House Media, Inc. or Zillow, Inc.
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