Mortgage Rate Watch
A new home can be the biggest purchase of your life. Before you start looking for the right home, you may want to research your mortgage options.
But not all mortgages are created equal. So, by doing your research beforehand, you can choose the option that best suits your financial situation and potentially puts more money in your pocket. You also know what guidelines to follow when applying.
Types of mortgages
- Conventional loan – Best for borrowers with a good credit score
- Jumbo loan – Best for borrowers with excellent credit looking to buy an expensive home
- Government-insured loan – Best for borrowers who have lower credit scores and minimal cash for a down payment
- Fixed-rate mortgage – Best for borrowers who’d prefer a predictable, set monthly payment for the duration of the loan
- Adjustable-rate mortgage – Best for borrowers who aren’t planning to stay in the home for an extended period, would prefer lower payments in the short-term and are comfortable with possibly having to pay more in the future
Conventional loans, which are not backed by the federal government, come in two forms: conforming and non-conforming.
Conforming loans – As the name implies, a conforming loan “conforms” to the set of standards put in place by the Federal Housing Finance Agency (FHFA), which includes credit, debt and loan size. For 2023, the conforming loan limits are $726,200 in most areas and $1,089,300 in high-cost areas.
Non-conforming loans – These loans do not meet FHFA standards. Instead, they cater to borrowers looking to purchase more-expensive homes or individuals with unusual credit profiles.
- Can be used for a primary home, second home or investment property
- Overall borrowing costs tend to be lower than other types of mortgages, even if interest rates are slightly higher
- Can ask your lender to cancel private mortgage insurance (PMI) once you’ve reached 20 percent equity, or refinance to remove it
- Can pay as little as 3 percent down on loans backed by Fannie Mae or Freddie Mac
- Sellers can contribute to closing costs
- Minimum FICO score of 620 or higher is often required (the same applies for refinancing)
- Higher down payment than some government loans
- Must have a debt-to-income (DTI) ratio of no more than 45 percent (50 percent in some instances)
- Likely need to pay PMI if your down payment is less than 20 percent of the sales price
- Significant documentation required to verify income, assets, down payment and employment
If you have a strong credit score and can afford to make a sizable down payment, a conventional mortgage is probably your best pick. The 30-year, fixed-rate mortgage is the most popular choice for homebuyers.
Jumbo mortgages are home loan products that fall outside FHFA borrowing limits. Jumbo loans are more common in higher-cost areas such as Los Angeles, San Francisco, New York City and the state of Hawaii, where home prices are often on the higher end.
Pros of jumbo loans
- Can borrow more money to purchase a more expensive home
- Interest rates tend to be competitive with other conventional loans
- Often the only finance option in areas with extremely high home values
Cons of jumbo loans
- Down payment of at least 10 percent to 20 percent required in many cases
- A FICO score of 700 or higher usually required
- Cannot have a DTI ratio above 45 percent
- Must show you have significant assets in cash or savings accounts
- Usually require more in-depth documentation to qualify
Who are jumbo loans best for?
If you’re looking to finance a home with a selling price exceeding the latest conforming loan limits, a jumbo loan is likely your best route.
The U.S. government isn’t a mortgage lender, but it does play a role in making homeownership accessible to more Americans by guaranteeing certain types of loans — thus lessening the risk for lenders. Three government agencies back mortgages: the Federal Housing Administration (FHA), the U.S. Department of Agriculture (USDA) and the U.S. Department of Veterans Affairs (VA).
- FHA loans – Backed by the FHA, these home loans come with competitive interest rates, and help make homeownership possible for borrowers without a large down payment or pristine credit. You’ll need a minimum FICO score of 580 to get the FHA maximum of 96.5 percent financing with a 3.5 percent down payment. However, a score as low as 500 is allowed if you put at least 10 percent down. FHA loans require mortgage insurance premiums, which can increase the overall cost of your mortgage. Lastly, with an FHA loan, the home seller is allowed to contribute to closing costs.
- USDA loans – USDA loans help moderate- to low-income borrowers who meet certain income limits buy homes in rural, USDA-eligible areas. Some USDA loans do not require a down payment for eligible borrowers. There are extra fees, though, including an upfront fee of 1 percent of the loan amount (which can typically be financed with the loan) and an annual fee.
- VA loans – VA loans provide flexible, low-interest mortgages for members of the U.S. military (active duty and veterans) and their families. There’s no minimum down payment, mortgage insurance or credit score requirement, and closing costs are generally capped and may be paid by the seller. VA loans charge a funding fee, a percentage of the loan amount, which can be paid upfront at closing or rolled into the cost of the loan along with other closing costs.
Pros of government-insured loans
- Help you finance a home when you don’t qualify for a conventional loan
- Credit requirements more relaxed
- Don’t need a large down payment
- Available to repeat and first-time buyers
- No mortgage insurance and no down payment required for VA loans
Cons of government-insured loans
- Mandatory mortgage insurance premiums on FHA loans that usually cannot be canceled
- FHA loan sizes are lower than conventional mortgages in most areas, limiting potential inventory to choose from
- Borrower must live in the property (although you may be able to finance a multi-unit building and rent out other units)
- Could have higher overall borrowing costs
- Expect to provide more documentation, depending on the loan type, to prove eligibility
Who are government-insured loans best for?
Are you having trouble qualifying for a conventional loan due to a lower credit score or minimal cash reserves for a down payment? FHA-backed and USDA-backed loans could be a viable option. For military service members, veterans and eligible spouses, VA-backed loan terms are often more generous than a conventional loan’s.
Fixed-rate mortgage
Fixed-rate mortgages maintain the same interest rate over the life of your loan, which means your monthly mortgage payment always stays the same. Fixed loans typically come in terms of 15 years or 30 years, although some lenders allow borrowers to pick any term between eight and 30 years.
Pros of fixed-rate mortgages
- Monthly principal and interest payments stay the same throughout the life of the loan
- Easier to budget housing expenses from month to month
Cons of fixed-rate mortgages
- If interest rates fall, you’ll have to refinance to get that lower rate
- Interest rates typically higher than rates on adjustable-rate mortgages (ARMs)
Who are fixed-rate mortgages best for?
If you are planning to stay in your home for at least five to seven years, and want to avoid the potential for changes to your monthly payments, a fixed-rate mortgage is right for you.
In contrast to fixed-rate loans, adjustable-rate mortgages (ARMs) have interest rates that fluctuate with market conditions. Many ARM products have a fixed interest rate for a few years before the loan changes to a variable interest rate for the remainder of the term. For example, you might see a 7/6 ARM, which means that your rate will remain the same for the first seven years and will adjust every six months after that initial period. If you consider an ARM, it’s essential to read the fine print to know how much your rate can increase and how much you could wind up paying after the introductory period expires.
Pros of ARMs
Lower fixed rate in the first few years of homeownership (although this isn’t a guarantee; as of late, 30-year fixed rates have actually been similar to those for 5/6 ARMs)
Can save a substantial amount of money on interest payments
Cons of ARMs
Monthly mortgage payments could become unaffordable, resulting in a loan default
Home values may fall in a few years, making it harder to refinance or sell before the loan resets
Who are adjustable-rate mortgages best for?
If you don’t plan to stay in your home beyond a few years, an ARM could help you save on interest payments. However, it’s important to be comfortable with a certain level of risk that your payments might increase if you’re still in the home.
Other types of home loans
In addition to these common kinds of mortgages, there are other types you may find when shopping around for a loan:
- Construction loans: If you want to build a home, a construction loan can be a good financing choice — especially a construction-to-permanent loan, which converts to a traditional mortgage once you move into the residence. These short-term loans are best for applicants who can provide a higher down payment and proof that they can afford the monthly payments.
- Interest-only mortgages: With an interest-only mortgage, the borrower makes interest-only payments for a set period – usually five and seven years — followed by payments for both principal and interest. You won’t build equity as quickly with this loan, since you’re initially only paying back interest. These loans are best for those who know they can sell or refinance, or for those who can reasonably expect to afford the higher monthly payment later.
- Piggyback loans: A piggyback loan, also referred to as an 80/10/10 loan, involves two loans: one for 80 percent of the home price and another for 10 percent. You’ll make a down payment for the remaining 10 percent.These loan products are designed to help the borrower avoid paying for mortgage insurance. But piggyback loans require two sets of closing costs, and you’ll also accrue interest on two loans, making this unconventional arrangement these best for those who will actually save money using it.
- Balloon mortgages: A balloon mortgage requires a large payment at the end of the loan term. Generally, you’ll make payments based on a 30-year term, but only for a short time, such as seven years. When the loan term ends, you’ll make a large payment on the outstanding balance, which can be unmanageable if you’re not prepared or your credit situation deteriorates. These loans are best for those who have the stable financial resources needed to make a large balloon payment once the loan term ends.
Mortgage Rates Drop Back to Last Week's Levels After Softer Inflation Data
We knew that today's Consumer Price Index (CPI) was a hotly anticipated economic report that at least had the potential to give rates a big push, and it didn't disappoint. Any time we're dealing with an important economic report that gives rates a big push, there's generally an equal chance of getting pushed in either direction. We can know this with confidence because rates are based on financial markets and traders wouldn't wait to make their move if they already knew what that move would look like. All that having been said, there are occasionally situations where these pushes end up being more likely to be bigger in one direction vs the other. Today could be argued to be benefiting from such a phenomenon simply because rates were at the highest levels in 8 months over the past few days. Some of the biggest single day rate drops we've seen have followed a similar formula (i.e. rates at long term highs followed by an obviously rate-friendly economic report). The past examples of this have only tended to involve 2 economic reports: the jobs report (which hurt us last week) and the Consumer Price Index (CPI), which helped us today. Long story short, the relevant components of the CPI data were lower than the market expected. Bonds improved immediately and lenders were able to move rates back down to the levels seen earlier last week. Granted, the levels seen earlier last week were still the highest in many months at the time, but any move back toward lower rates has to start somewhere. We won't know how long this one will last until we see the extent to which additional economic data supports the same conclusion.
1 day 17 hours ago
Checkout newsMortgage Rates Make a Modest Recovery Ahead of Important Inflation Data
Mortgage rates officially hit the highest levels since May 2024 yesterday, even though the average was almost imperceptibly higher than last Friday's. We saw a similarly small move today, but in the opposite direction. In other words, the average rate moved lower by an amount that won't even have an impact on many of yesterday's rate quotes. As always, keep in mind that our rate index is an average of multiple lenders and on days with very small changes, some lenders can be noticeably better or worse compared to the previous day. This morning's economic data featured the Producer Price Index (PPI)--a report that measures inflation at the wholesale level. It came in at lower levels than expected. That would normally be good for rates, but it didn't have much of an impact today. Tomorrow's inflation report--the Consumer Price Index (CPI)--is in a different league. If it undershoots forecasts by the same margin, rates would almost certainly move lower. Conversely, rates would almost certainly rise if inflation overshoots forecasts. There's no guarantee of rate-friendly data tomorrow simply because today's inflation report was lower than expected. CPI frequently departs from PPI on any given month, even though the two tend to do the same things over longer time horizons.
2 days 17 hours ago
Checkout newsMortgage Rates Slightly Higher to Start New Week
Mortgage rates rose to the highest levels since May 2024 by the end of last week following a stronger reading on the jobs report. Technically, the same thing happened today, but only because rates inched just a bit higher from Friday's latest levels. This time around, there wasn't any big-ticket economic data to motivate movement and the minimal change could just as easily be seen as incidental or "almost sideways." The more important consideration is the new round of potential volatility on the horizon. Whereas it was the jobs report last week, this week's critical data will be Wednesday's Consumer Price Index (CPI). Tomorrow's inflation data (the Producer Price Index) is not quite as important, but a nonetheless capable of causing a reaction. If inflation comes in higher than expected, it could easily push rates even higher. The average lender is now up to 7.25% for a top tier conventional 30yr fixed scenario.
3 days 17 hours ago
Checkout newsMortgage Rates Jump Sharply Higher After Jobs Report
Mortgage rates were already at 6 month highs earlier this week so it didn't take much of a push to send them up to new 7 month highs today. The push in question came from today's hotly-anticipated jobs report. No other economic report has as much consistent potential to cause volatility for interest rates. As such, when today's job creation headline came in at much higher levels than expected, it was an easy decision for traders to push rates to higher levels. The average top tier 30yr fixed rate was closer to 7.125% yesterday. After today's route, that rate is now almost perfectly centered on the 7.25% level (mortgage rates are typically offered in 0.125% increments). These are the highest levels since May 2024. From here, the pain could continue if next week's data sings a similar tune. While not as consistent a market mover as the jobs report, Wednesday's Consumer Price Index (CPI) is the only other economic report that's in the same league. A particularly balmy inflation reading could easily push rates up another 0.125%--possibly more. Conversely, a sharply lower inflation reading could be worth just as much of a recovery.
6 days 17 hours ago
Checkout newsMortgage Rates Just a Hair Lower. Friday Could be Much More Volatile
Mortgage rates are driven by movement in the bond market and bonds were on a shortened schedule today due to the federal day of mourning for Jimmy Carter. As such, volume and volatility were in short supply. Still, overnight market movement allowed the average lender to offer a microscopic improvement versus yesterday. Tomorrow (Friday, Jan 9th) is a different story. The big jobs report comes out at 8:30am ET. Bonds routinely react to this report more than any other scheduled monthly data. In other words, there is much higher potential for volatility tomorrow as that reaction plays out. As always, there is no way to know which direction things will move in response to economic data until we actually have the data in hand. As always, it's not whether the data is higher or lower than last time, but rather, how it comes in compared to the median forecast. In this case, the median forecast for job creation is 160k, much lower than last month's 227k. If jobs were to come in under 100k, rates would likely improve. If the number is over 200k, rates would likely rise. The unemployment rate is also a consideration. It's expected at 4.2%. Higher is better for rates, and vice versa.
1 week ago
Checkout newsHighest Mortgage Rates Since June
For the second day in a row, mortgage rates have moved higher at a modest to moderate pace. Unfortunately, that's been a trend so far in 2025 and it's compounded by the fact that rates were already close to their recent highs. The net effect is a move up to the highest levels since June for the average lender's top tier conventional 30yr fixed rate. That rate has been over 7% more often than not since October 29th, and exclusively since December 19th. Are rates "headed to 8 percent?" That's a figure that gets thrown around quite a bit in social media, etc., but there's only one average rate today, and it's 7.17%. This means the prevailing top tier rate quote is fairly evenly split between 7.125 and 7.25 (because mortgage rates are typically offered in 0.125% increments). There's no way to know if rates are headed to 8 percent. If they are, there's certainly no way to know today. It would be just as plausible to claim that rates are headed to 6.5%. Neither is more than a guess, educated or otherwise, and cases could be made for both. As has been and continues to be the case, economic data does the most to guide the path forward for rates. Specifically, any heroic drop in rates would require downbeat data on the economy and inflation. We didn't have any of that today, so here we are.
1 week 1 day ago
Checkout newsMortgage Rates Rise to Match 6 Month Highs
We came into the current week knowing that rates would take cues from any clear cues in this week's economic data. In general, that means higher rates in response to stronger data or lower rates if the data is weaker. Today's data was stronger across the board. One of the most closely watched economic reports that most people have never heard of--ISM's Service sector index--was only a bit higher than markets expected, but the report includes separate components for things like employment and prices. Today's release showed a sharp increase in prices and that's a particularly sensitive subject for rates these days. At the same time, the US government released job openings numbers which showed an unexpected uptick back to the highest levels in 6 months. Higher jobs openings tend to coincide with higher rates. Incidentally, mortgage rates also matched their highest levels in 6 months today, last seen on December 19th and July 1st. On the plus side, this didn't represent a huge move from yesterday's latest levels with the average lender only increasing 30yr fixed rates by 0.04%.
1 week 2 days ago
Checkout newsMortgage Rates Barely Budge to Start New Week
The bond market and interest rates have arrived at the first full week of the new year almost exactly where they left off before the X-mas/New Year holiday weeks. There was a small amount of underlying volatility in bonds today, but not enough to translate into volatility for mortgage rates. This kept the average lender near 7.125% for a top tier conventional 30yr fixed rate. Although the past 2 weeks have been uneventful for rates, the next 2 weeks will be heavily influenced by incoming economic data. There are several honorable mentions over the next few days before getting to this week's headliner on Friday: the jobs report. The data between now and Friday is certainly capable of causing movement in either direction, but the jobs report is capable of causing much MORE movement. In all cases, bigger volatility requires a bigger deviation from the market's expectations. Where do expectations come from? Hundreds of economists/analysts submit or publish forecasts for most of the regularly-scheduled economic data. The median of those forecasts is then published as a consensus--effectively THE forecast. In general, if the data suggests the economy is weaker or inflation is lower versus the forecast, it's good for rates.
1 week 3 days ago
Checkout newsMortgage Rates Slightly Higher Today, But Generally Flat Over Past 2 Weeks
The official holiday dates may be in the rearview, but as far as interest rates and underlying bond markets are concerned, this was the last day of the winter holiday season. The same logic would put the start of the holiday season at December 23rd--a day where the average top tier 30yr fixed rate was exactly the same as it was today. Today's rates had a chance to end up slightly lower, but the bond market responded to a decent showing in this morning's only major economic report. The ISM Manufacturing Index (one of many monthly economic reports that can influence day-to-day rate momentum) didn't suggest any major surge in activity, but it did come in slightly stronger than the market expected. The reaction was logically mild, sending the average 30yr rate up by 0.03%. The stakes increase next week as market activity traditionally increases quickly on the first full week of the year. We'll also get several other economic reports including Friday's big jobs report--consistently in a class by itself when it comes to its power to influence interest rates.
1 week 6 days ago
Checkout newsMortgage Rates Haven't Moved Much Since Fed Week
The last time mortgage rates were moving with any sense of urgency was in the days surround the Fed's rate cut on December 18th. Incidentally, that movement was sharply higher, which is just as likely as any other outcome when the Fed is cutting rates for a variety of reasons. The rate rise leveled off by the end of Fed week with the average lender offering top tier conventional 30yr fixed rates near 7.125. The average is only modestly lower today (7.07) and hasn't moved much at all since then. This sort of ambiguity is the default game plan for winter holidays due to changes in bond market participation. It's also a byproduct of the available economic data. In not so many words, the Fed was the last major input, and we won't get to the next one until next Friday's jobs report. Between now and then, moderate movement in either direction is possible, but any significant changes will require a surprise in the data.
2 weeks ago
Checkout newsMortgage Rates Slightly Higher as Markets Close Early
Major holidays typically involve a full day market closure along with an "early close" on an adjacent day. This matters to rates because mortgage lenders decide what they can offer based on trading levels in the bond market. Mortgage lenders also need a certain amount of activity in the market if they hope to set competitive rates. As you might imagine, those "early close" days don't tend to have as much activity, so lenders aren't making as many adjustments as normal. In today's case, that ended up being helpful as it limited the amount of negative adjustments. Specifically, the average lender began the day in roughly the same territory as yesterday, but the bond market took a turn for the worse a few hours later. Based on the pace of the weakness in the bond market, the average lender would normally issue a negative reprice (increasing their rates for the day). As it happened, only a small handful of lenders repriced. On one hand, this could mean that Thursday's rates start out higher. On the other hand, there's no way to know where the bond market will open up on Thursday. Either way, the final or first trading day of any given year can see some excess volatility/momentum for reasons that have nothing to do with the normal motivations (economic data, news, policy changes).
2 weeks 2 days ago
Checkout newsMortgage Rates Modestly Lower to Begin Another Holiday-Shortened Week
Because mortgage rates are determined by trading levels in the bond market, when the market is closed, lenders don't update their rate offerings. As such, there were no rate updates last Wednesday for the Christmas holiday and the same will be true this week for New Year's Day. In addition, it's common practice for the bond market to close early on the day before a major holiday observance (or the day after in the case of Thanksgiving). Most mortgage lenders are still technically open on those half days, but many of them are making more conservative adjustments to rates. In fact, lenders often take a more conservative approach to entire Christmas and New Year's week due to the inconsistent market conditions commonly seen at the end of the year. While the average lender may be playing it a bit safer than normal today, there has at least been a logical correlation with improvement in the bond market. Simply put, bonds are doing better today, so the average mortgage rate is lower than it was at the end of last week. The average lender is still over 7% for a top tier 30yr fixed scenario, but just barely.
2 weeks 3 days ago
Checkout newsMortgage Rates Little Changed Today, This Year, And Over The Past 2 Years
Mortgage rates didn't move much today, and markets have been very quiet due to the holiday week. So we'll take a quick moment for a retrospective. In September 2022, 30yr fixed mortgage rates crested 7% for the first time in more than 2 decades. The following year saw rates move momentarily under 6% and over 8% before returning to 7% by December. Surely, that broadly sideways performance in 2023 meant that a corner had been turned. Up until the past few months, 2024 indeed looked like a decisively more hopeful year. To be fair, it was still better than 2023, but ultimately, just as sideways in the end. Will we find ourselves in the same position at the end of 2025? That depends on the state of the economy and inflation. The latter is of critical importance. Until and unless inflation sustainably returns to 2% or lower, longer term rates will have a very hard time making significant progress. Even then, the U.S. will need to avoid and preferably reverse the post-pandemic trend of heavy issuance of Treasuries--something that keeps rates elevated regardless of inflation or the economy. If there's a saving grace, it's that this 3 year time frame (2022-2024) now looks a lot like 1980-1982 in terms of the trajectory of rates, and that was the big turning point for the only comparable episode in modern economic history.
2 weeks 6 days ago
Checkout newsMortgage Rates Start Higher, But Recover in Afternoon
Mortgage rates are based on trading levels in the bond market and bond market activity has been extremely slow, as is normally the case during the Christmas holiday week. The side effect of the slow activity is the risk of more random volatility. In other words, bonds (and thus rates) can move in either direction (or in both directions on the same day) for no apparent reason. Today was one of those "both directions" days. At the start of the day, bonds were at their weakest levels in months. As such, it was logical to see mortgage rates begin the day near their weakest levels in months. Fortunately, the worst was over early in the day and bonds improved steadily from then on out. Mortgage lenders prefer to set rates once per day and they typically only change when bonds move enough. Today's improvement was enough for most lenders to make friendly adjustments by the afternoon. After those improvements, the average lender was back near the levels seen on Tuesday, and slightly below last week's highs. Top tier conventional 30yr fixed rates continue to operate near the 7.125% mark.
3 weeks ago
Checkout newsMortgage Rates Higher to Start Holiday-Shortened Week
Holidays have inconsistent impacts on mortgage rates because holiday's have inconsistent impacts on the bond market (and rates are dictated by the bond market). Bond traders (the people buying and selling the bonds that ultimately determine mortgage rates) are people too. They take vacations, or tack an extra day or two onto a scheduled holiday market closure to make for an extended holiday weekend. When more than a few traders are absent, the balance of remaining traders can make for different dynamics than would normally be seen. This can cause some distortion in rates around the holidays, typically in the form of increased volatility. Trader absences aren't the only consideration--especially in late December. There can be a lot of seemingly random trading motivation that acts to push rates higher or lower regardless of the cues from the more normal inputs (such as economic data and policy changes). In the current case, we're fresh off a monetary policy communication that had a negative impact on rates. Now in the new week, rates are moving higher yet again, despite what would normally be friendly cues from this morning's economic data. The light trading volume suggests the holiday idiosyncrasies are at least partly to blame. The average mortgage lender is back near its highest rates of the past few months, with top tier conventional 30yr fixed rates hovering around 7.125%.
3 weeks 3 days ago
Checkout newsMortgage Rates Recover Some of The Lost Ground
The week's big story is still the big jump in rates that took place after Wednesday's Fed announcement. And while rates remain noticeably elevated on the week due to that jump, they're set to end the week at slightly less elevated levels. Credit this morning's inflation data for that development! Part of Wednesday's Fed Day drama involved a renewed focus on inflation reports. That added to anxiety because Friday's PCE inflation index is one of the two big inflation reports that come out each month. The bond market that underlies day-to-day interest rate movement is most focused on what's known as "core" inflation, which discounts the more volatile food and energy components. If month over month core inflation is running just under 0.2%, annual inflation would eventually hit its 2.0% target. Today's monthly core PCE came in at 0.1%, which was lower than the market expected. In year over year terms, there's more work to do, as PCE remained at 2.8%. The market actually expected a 0.1% increase on the annual number. In general, when reports like PCE (or its counterpoint, CPI) come in lower than expected, it puts downward pressure on rates. Today was no exception with the average lender getting back almost half of the ground lost on Wednesday. Top tier 30yr fixed rates are still over 7%, but only just.
3 weeks 6 days ago
Checkout newsIf You're Struggling to Understand This Week's Mortgage Rate Spike, This is For You
We received some anonymous feedback regarding recent rate commentary that serves as a good reminder that not everyone may be picking up what we're putting down, or worse yet, picking up things that we never put down in the first place. We spend a lot of time talking about how the bond market prices in the impact of Fed rate cuts on the occasions where those rate cuts are expected with a high probability--as was the case with yesterday's cut. Specifically, Tuesday's rate commentary said: " The market is already well aware that the Fed is cutting rates tomorrow and those expectations are already 100% reflected in the mortgage rates that are available today." The hiking/cutting of the Fed Funds rate is the only variable under consideration in that comment. The following paragraph said: "If rates rise or fall tomorrow, it would be due to other components of the Fed announcement, such as the Fed's quarterly rate outlook survey (officially, the dot plot in the Summary of Economic Projections, released concurrently with the rate announcement at every other Fed meeting) or the press conference with Fed Chair Powell that begins 30 minutes after the rate announcement." This brings us to the point because, indeed, it was definitely all that "other stuff" that caused rates to surge higher yesterday. Those who want to dig into that in detail can read the full coverage here.
4 weeks ago
Checkout newsMortgage Rates Jump Abruptly Higher After The Fed's Rate Cut
If anyone needed any further convincing that a Fed rate cut is no guarantee of lower mortgage rates, today is a great piece of evidence. Perhaps "great" is the wrong word. There was nothing great about the mortgage rate movement following today's Fed rate cut. The average lender is at least 0.20% higher than earlier this morning. Lenders are still in the process of adjusting their rate sheets, so the total damage could vary slightly by the time we're able to run the full numbers. Either way, the top tier conventional 30yr fixed rate will easily be back over 7% for the average lender. What gives? First off, the mortgage rate spike has nothing to do with the Fed's rate cut. That cut was only a small part of the information released by the Fed today. It was also the most predictable part. When something is predictable in financial markets, it can be traded, and that trading means that longer term rates (like mortgages) can move into position well in advance of Fed cuts/hikes. Moreover, mortgage rates care more about the Fed's rate cut/hike outlook than they do about one individual cut/hike. That's where things started going wrong today. The Fed communicates its outlook 4 times a year via the summary of economic projections and the infamous "dot plot" (a chart with each Fed member's view on the appropriate Fed Funds Rate at various points in the future). Today's dot plot showed the median Fed member sees much higher rates by the end of next year compared to the last dot plot 3 months ago. The following chart shows the new dots in blue and old dots in red. The year to focus on is 2025. Note the migration upward from the low 3 to high 3 percent range.
4 weeks 1 day ago
Checkout newsMortgage Rates Effectively Unchanged Ahead of Fed Announcement
Mortgage rates have been having a much calmer week compared to last week. Monday brought a modest decline versus last Friday and today's rates are effectively unchanged. While the average lender is still noticeably higher compared to the first few days of the month, this resilience helps make a case that rates aren't eager to revisit the higher levels seen during most of November. Volatility could increase tomorrow afternoon following the Fed's rate announcement. As a reminder, the Fed DOES NOT set mortgage rates and a Fed rate cut DOES NOT mean mortgage rates will go down by a similar amount--if at all. The market is already well aware that the Fed is cutting rates tomorrow and those expectations are already 100% reflected in the mortgage rates that are available today. If rates rise or fall tomorrow, it would be due to other components of the Fed announcement, such as the Fed's quarterly rate outlook survey (officially, the dot plot in the Summary of Economic Projections, released concurrently with the rate announcement at every other Fed meeting) or the press conference with Fed Chair Powell that begins 30 minutes after the rate announcement.
4 weeks 2 days ago
Checkout newsMortgage Rates Start New Week With Some Hope
Last week wasn't great for mortgage rates. They moved higher on each of the 5 days. Moreover, there was a distinct lack of logical motivation from the economic data. In fact, on a few occasions, the data argued for lower rates only for things to move in the other direction by the end of the day. The new week is off to a different start. Today's only relevant economic data argued in favor of higher rates, but the average lender ended the day in slightly lower territory compared to Friday afternoon. Granted, it wasn't a big victory, by any means (many lenders are effectively unchanged), but after last week, we'll take any victory we can get. Volatility risks increase substantially on Wednesday when the Fed releases its next policy announcement. Out of the 8 Fed meetings per year, 4 of them include an update on each Fed member's rate projections. These meetings tend to produce bigger reactions in rates and this meeting is one of those 4. As always, volatility can play out for better or worse. Traders are already assuming the Fed will pencil in a slower pace of rate cuts than they did in the September meeting. Some of the recent rise in rates reflects those trades. The Fed isn't the only game in town. There are a few other economic reports that could help or hurt rate momentum, depending on the outcome. The first of those is tomorrow morning's Retail Sales report which is released at 8:30am ET.
1 month ago
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66 Prospect St, Ridgefield, CT 06877
1701 Ringling Blvd, Sarasota, FL 34236
Other Companies
803 S Walker St, Burgaw, NC 28425
72 F.D. Buddy E Pkwy # 100, Oxford, MS 38655
2390 W Station St, Kankakee, IL 60901
1306 W Stevens St, Carlsbad, NM 88220
222 1st Ave, Chester, CA 96020