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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.

Pros of conventional loans

  • 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

Cons of conventional loans

  • 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

Who are conventional loans best for?

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.

 

Basically The Worst Day For Mortgage Rates Since October 2022
Mortgage rates surged at a pace seen only one other time since October 2022.  The average lender moved up by 0.28%, which is functionally equivalent to the 0.29% seen after the February 2nd jobs report.  In fact, today was arguably worse because the Feb 2nd example happened a day after rates hit long-term lows.  The implication is that the jump would not have been as big in early Feb if rates weren't undergoing a correction from those lows. Hair splitting aside, there just aren't many past examples of rates rising more than a quarter point in a day. Before covid, it had happened one other time in the past decade. Translation: it was a rough day for rates.  But why? We've been rather incessantly focused on the risks associated with today's Consumer Price Index (CPI) in the days and weeks leading up to its release.  It ended up exceeding the hype by showing that inflation refuses to head to the lower levels required for a lower interest rate environment.  Today is really that simple. Rates are highly dependent on inflation data at the moment.  We'll get another inflation report tomorrow, but it never operates on the same scale of relevance to rates as CPI.  That's not to say a friendly result wouldn't help, but the data stands an equal chance to be unfriendly, thus compounding today's problems as opposed to taking the edge off. We'll talk more about longer-term, bigger-picture implications on Friday.

  Mortgage Rate Watch

 3 days 23 hours ago

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Decent Recovery For Mortgage Rates, But Huge Volatility Potential Ahead
Mortgage rates roughly matched their highest levels in months yesterday, but managed to turn things around today.  One could argue that the broader bond market (which dictates rates) began to turn things yesterday morning and that the only reason rates moved higher was the overnight bond market movement.   So today was either a new recovery or a continuation of yesterday's recovery, but none of that matters now.  Wherever we may be this afternoon, we may be somewhere completely different tomorrow afternoon.  While that's true every day the market is open, it's a much bigger version of true today. Why? Tomorrow morning marks the release of the Consumer Price Index (CPI).  Of all the monthly economic reports, this one has the most potential to cause volatility for rates.   Is volatility bad or good?   It's important to understand that volatility is a two way street.  A very low reading on CPI would likely push rates much lower while a very high reading would do the opposite.  Additionally, it is also possible for the data to thread the needle and leave rates roughly unchanged, but the point is that the range of potential outcomes is much wider than normal.

  Mortgage Rate Watch

 4 days 23 hours ago

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Mortgage Rates Near Highest Levels Since February
Mortgage rates moved up somewhat abruptly today as the bond market lost more ground over the weekend.  Rates are driven primarily by bonds, but mortgage lenders tend to only update rates once per day unless the bond market is moving very quickly. With that in mind, bonds were losing ground on Friday afternoon, but not quickly enough or early enough for a majority of lenders to adjust pricing.  As such, lenders already had some catching up to do regardless of today's bond market weakness.  The combination of the two factors (the "catch-up" and the new weakness) caused today's spike to be bigger than average. That said, there weren't any compelling news headlines or economic reports driving the weakness.  It would be better thought of as a hangover from Friday's jobs report. As the week progresses, there will certainly be at least one major economic report with a proven track record of causing big reactions in rates: the Consumer Price Index (CPI) on Wednesday morning.  With the average lender already near the highest levels since February, a bad reaction to CPI could easily launch rates back to levels not seen since November.  On the other hand, if CPI manages to come in much lower than expected, rates would almost certainly drop.

  Mortgage Rate Watch

 6 days ago

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Mortgage Rates Surprisingly Steady Despite Strong Jobs Report
Data dependent... That's a phrase that is all too prevalent in financial markets and among members of the Federal Reserve.  It refers to the fact that economic data will guide the future path of interest rate decisions.   While rates always depend on data, the data outlook isn't always as uncertain as it has been in the past few years.  At times, we've been waiting for inflation and job growth to stop surging.  At other times, we've been waiting for them to confirm a move in the other direction.  Either way, there are a few reports that financial markets watch more closely than others and today's jobs report is one of the best examples. When job growth is higher than expected, the default reaction is for rates to move higher.  The bigger the "beat" (which refers to the actual job count versus the median forecast among multiple economists), the bigger the rate jump tends to be, on average.  With that in mind, today's payroll count of 303k versus a median forecast of 200k was a big beat!   It was no surprise to see bonds lose ground and rates move higher, but the size of today's rate increase is much more curious.  The average lender was only modestly higher in rate.  It's curious, but it may not be incredibly surprising.  Again, it's all about the data, and although Friday's jobs report is definitely one of the two most important reports on any given month, next week's Consumer Price Index (CPI) is bigger.  Today's resilience could have a lot to do with the market waiting to see those results next Wednesday.

  Mortgage Rate Watch

 1 week 2 days ago

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Nice Move Lower in Mortgage Rates Ahead, But Tomorrow is a New Day
Mortgage rates may have been able to claim some resilience over the past few days, but it hasn't been a great week in general.  The average lender jumped quickly over 7% for a top tier conventional 30yr fixed rate on Monday.  The next two days were much less interesting. Now today, the not-so-great week is showing some signs of promise.  Without much by way of provocation or justification, rates dipped just a hair under 7%.  The nuts and bolts explanation is that the bond market improved this morning following a somewhat weaker reading in Jobless Claims, but other factors relating to timing and recently defensive pricing strategies among lenders help flesh out the story. More importantly, everything that has happened up until today is of secondary importance to what's about to happen when it comes to interest rate volatility, or at least to the POTENTIAL for volatility.  That's because tomorrow morning brings the Employment Situation, otherwise known as "the jobs report."  Along with the Consumer Price Index (CPI), this is one of two reports with vastly more power to cause drama for rates than any other report. The jobs report will be released at 8:30am tomorrow morning.  There is no way to know if it will be good or bad for rates ahead of time--only that it can do either of those things in grand fashion.  That said, it occasionally threads the needle without much fanfare.  If that were to happen, it would place even more focus on the next CPI report which happens to be coming out next week.  

  Mortgage Rate Watch

 1 week 3 days ago

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Mortgage Rates Nearly Unchanged Despite Early Drama
After starting the week with a sharp move higher, mortgage rates managed to avoid losing much ground yesterday.  This was only achieved with a recovery in the bond market that erased early morning losses (rates are based on bonds and when bonds improve, lenders can update mortgage rates during the day). Today was a strikingly similar pattern.  Bonds had a rough morning thanks to the first few economic reports of the day.  Once again, there was a rate-friendly reversal led by the day's most important economic report at 10am.  In the current case, gains were also facilitated by friendly comments from Fed Chair Powell during a speech early in the afternoon. Even before the bond market reversal, lenders had only increased rates modestly.  After the reversal, many lenders were again able to offer mid-day improvements that brought the average back within a hair of yesterday's latest levels. From here, Thursday's economic calendar is less interesting, but Friday's jobs report is the biggest potential source of volatility in several weeks.

  Mortgage Rate Watch

 1 week 4 days ago

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Mortgage Rates Much Calmer Today
After starting the week with a fairly large jump, mortgage rates had a much calmer day on Tuesday.  This was made all the more impressive by the fact that the underlying bond market suggested another increase earlier this morning. To be fair, the average mortgage lender was definitely showing noticeably higher rates this morning, but many lenders were able to offer improvements over the course of the day as the bond market made progress back toward unchanged levels.  Bonds and rates are taking their primary cues from economic data these days and this week is active in terms of new economic reports.  Today's job openings data happened to be a non-issue, but only because it came in almost perfectly in line with forecasts. Tomorrow brings an important index that measures growth in the services sector that could set the tone for rate momentum heading into Friday's even more important jobs report.

  Mortgage Rate Watch

 1 week 5 days ago

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Mortgage Rates Sharply Higher to Start The Month
March ended with a streak of some of the flattest day-over-day changes in mortgage rates on record.  It was all but certain that the new week/month would bring a change to that sideways trend, but the reality has immediate and abrupt. Right at the start of domestic trading hours, bonds began to lose ground.  This means that traders were selling and yields were rising.  Higher yields in bonds equate with higher mortgage rates, all other things being equal. Frustratingly, there were no obvious explanations for the initial push toward higher rates this morning.  Some market watchers may have pointed to inflation data that came out last Friday when the market was closed, but if that was the motivation, it wasn't obvious to the billions of dollars in trading that had taken place before yields began to rise. What we  can  confirm is that this morning's economic data made things worse for rates. Both S&P and ISM released their manufacturing indices for March.  Both were higher than expected and both mentioned higher prices. Prices are critical at the moment because inflation is keeping rates elevated.  If inflation refuses to resume the downward trajectory that was in place through the end of 2023, rates won't have a compelling reason to rally.   The net effect of this morning's bond market rout was an increase of more than an eighth of a percent for the average mortgage lender on top tier 30yr fixed loans.  

  Mortgage Rate Watch

 1 week 6 days ago

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Near Record Setting Week For Boredom Among Mortgage Rate Watchers
Unfortunately, we don't have a great way to measure all of the past precedents, but it's safe to say that the this was one of the least volatile weeks in the history of mortgage rates.  Our daily rate index never moved more than 0.01 and it remained in a 0.01 range. Today's average rate was right in line with yesterday's even though the bond market (the thing that normally dictates rates) suggested some movement.  Despite the suggestion, it's not a huge surprise to see another flat day given the early close in financial markets and the full closure tomorrow.  Lenders often adopt less nimble pricing strategies on these holiday weeks--only making noticeable moves when the market really forces their hands. Next week continues to be a different story--at least in terms of what's possible.  In other words, this week was never likely to offer much excitement.  Next week has infinitely more potential to do so depending on the outcome of the economic reports--especially Friday's jobs report. 

  Mortgage Rate Watch

 2 weeks 3 days ago

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Super Steady Streak Sustained
There are probably only a few 4-day streaks with effectively no movement in mortgage rates, and this is one of them.  After falling to 6.91% last Friday, the MND rate index hasn't moved more than 0.01%. Granted, some lenders have been higher or lower during that time, but they offset each other in such a way that the average stayed flat. There's no special significance to this development.  It's more of a trivia novelty.  If we were determined to assign meaning, we could say that the flat performance is evidence that the rate market is fraught with uncertainty as it waits to see how the next round of significant economic data will shape the next trend.  Markets don't have to wait much longer as the more relevant reports start rolling in next Monday.  As for this week, there are several middle tier reports on Thursday morning, and then markets are closed on Friday.

  Mortgage Rate Watch

 2 weeks 4 days ago

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Mortgage Rates Barely Budge For 2nd Straight Day
After moving back under 7% last week (conventional, 30yr fixed, top tier scenario), mortgage rates have been increasingly unlikely to move.  Today was the 2nd day in a row with essentially no change for the average lender. Rates are driven by bonds and bonds are waiting on the most relevant economic data to offer a comment on the path of inflation and the economy in general.  If inflation falls a bit more or if the economy shows marked signs of weakening, it would tip the scales in favor of lower rates. Most of the data in question will be released next week.  This week is sparse by comparison.  Today's data was mixed and it wasn't highly consequential in the first place.  Tomorrow is essentially data-free.  Thursday brings several reports, but again, nothing substantial.  With Friday being a holiday, the takeaway is that volatility is a much more relevant risk next week.  

  Mortgage Rate Watch

 2 weeks 5 days ago

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Mortgage Rates Basically Unchanged Over The Weekend
Mortgage rates enjoyed a decently strong week last week, with the average top tier conventional 30yr fixed rate moving down to 6.91% by Friday from 7.09% on the previous Friday.  To put today's "unchanged" headline in perspective, that same number is up to 6.92% this afternoon. To put all of the above in an even broader perspective, the recent, major extremes consist of October 2023's highs at just over 8% and late December lows just over 6.6%.  In other words, we've moved a bit higher in 2024, but are still holding on to a majority of the improvement from long-term peak. There were no obvious motivations for rate movement today and that could be an ongoing theme this week based on the scarcity of big ticket market moving events.  That's especially notable compared to next week's calendar which boasts a major event on 4 out of 5 days with Friday bringing one of the two most important economic reports of any given month: the jobs report.

  Mortgage Rate Watch

 2 weeks 5 days ago

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Mortgage Rates Now Lowest in Nearly 2 Weeks
As the broader market continued rubbing its eyes in disbelief over the Fed's exceptionally calm attitude on inflation, bonds continued to improve today.  Stronger bonds mean lower rates.  The average mortgage lender was able to drop rates to the lowest levels in nearly 2 weeks--just a hair above March 11th levels. Most of the bond market improvement was in place before 9am and things were very calm after that.  This meant minimal mid-day price changes.   Next week has less by way of consequential calendar events compared to this week and it's also made shorter by the Good Friday Holiday closure.  After that, volatility risks will be increasing quickly as the first week of April brings several highly consequential reports. 

  Mortgage Rate Watch

 3 weeks 1 day ago

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Mortgage Rates Are Actually LOWER This Week
It's Thursday and thus time once again to check in with Freddie Mac's weekly mortgage rate survey versus reality.  To be fair, it's not that Freddie isn't participating in reality.  It's just not the same version of reality you might prefer if you are in need of more timely updates on rate trends. Freddie logged a big increase over last week, which makes sense considering last week's survey was much lower than it should have been due to Freddie's methodology and timing (we discussed it here: https://www.mortgagenewsdaily.com/markets/mortgage-rates-03152024). This time around, Freddie's survey is averaging the 5 days from last Thursday through yesterday.  Today's rate is lower than all of those with the average lender back into the high 6's.   NOTE: Freddie also has their rate in the high 6's, but it tends to run much lower than the MND rate because it doesn't include any impact for points or special loan programs.  This is one of the many reasons we say the best way to follow a rate index is to observe the CHANGE over time as opposed to outright levels. 

  Mortgage Rate Watch

 3 weeks 2 days ago

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Fed "Held Rates Steady," But Mortgage Rates Improved
The rate market was intently focused on today's announcement from the Federal Reserve.  While many news headlines emphasize the Fed "holding rates steady," but that's not what the bond market was focused on.  Because mortgage rates are determined by the bond market, that meant they were free to move even though the Fed stood still. Markets were most interested in the Fed's projections for future rate cuts.  In not so many words, those projections retained the Fed's previous expectation of 3 rate cuts by the end of this year, albeit by a smaller margin than the last round of projections in December. This was a bit more hopeful than markets expected. As such, bonds improved and mortgage rates fell.   The catch is that the improvement wasn't very big, so the average mortgage lender is still in noticeably higher territory compared to the beginning of last week.

  Mortgage Rate Watch

 3 weeks 3 days ago

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What Will The Fed Do To Mortgage Rates on Wednesday?
Mortgage rates were roughly unchanged on Tuesday, capping a short but meaningful losing streak over the past 6 business days. During that time, the average 30yr fixed rate move back into the low 7s and came close enough to the 2024 ceiling from 3 weeks ago. Impending events are set to either reinforce the ceiling or see it broken.  The events in question are the 3 components of Wednesday's "Fed day."  It used to be that a Fed announcement was simply a document that specified whether the Fed was hiking/cutting rates, along with some prose talking about the outlook for rates and the economy.  That policy statement is still part of the show, but it's joined by a press conference with the Fed Chair on each of the 8 announcement per year. The even bigger source of volatility is the Fed's summary of economic projections (SEP) which is only released on 4 out of the 8 Fed days each year.  Wednesday's announcement is one of the 4.   The SEP matters because it contains an outlook for the Fed Funds Rate for each individual member.  The Fed Funds Rate itself does not directly dictate mortgage rates, but CHANGES in rate cut/hike expectations tend to give mortgage rates a decisive push in one direction or the other. The market is already expecting a bit of an unfriendly change this time around, but the reality could easily differ from expectations.  To whatever extent it does, mortgage rates are likely to make bigger moves tomorrow, for better or worse.

  Mortgage Rate Watch

 3 weeks 4 days ago

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Mortgage Rates Inch to March Highs
Rates marched higher to the highest levels in March today, but most lenders are only microscopically worse off than Friday afternoon.  In the slightly bigger picture rates have moved up roughly a quarter of a percent in just over a week and that's a relatively quick move. The last time rates rose a quarter of a point in short order was at the beginning of February.  The entire jump happened in a single day following the release of much stronger jobs data.  It was also followed by additional momentum thanks to inflation data in the following week. The current move is also data driven with two inflation reports coming in hotter than expected last week.  The average lender is now very close to their highest levels in several months, which seems fitting considering the arrival of the next Fed announcement on Wednesday. We already know the Fed will not be cutting rates.  We don't know how they'll adjust their rate outlook for the rest of the year.  The last update (on December 13th) was very friendly.  This update should be less so.  If the Fed's shift in "friendliness" matches market expectations, we may not get too much volatility, but considering the circumstances, volatility is a distinct risk.  

  Mortgage Rate Watch

 3 weeks 6 days ago

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On The Road To Rate Cuts, Markets Asking "Are We There Yet?" (Spoiler Alert: No)
Back in late 2023, we got in the car with the Federal Reserve with the promise of a trip to our favorite place: the land of lower interest rates. In 2024, we keep asking "are we there yet?" The more we ask, the farther we seem to be from the destination. This trip began with all the best intentions. Softer inflation and cooler economic data led the Fed to expect an opportunity to cut rates several times in 2024.  The Fed communicated as much in mid-December.  Markets took things a step further with futures contracts pricing in 6 cuts by the end of the year.  "6 rate cuts" was a refrain that echoed throughout the mortgage and housing industries.  Suddenly, too many people were risking disappointment by not understanding the HIGHLY conditional logic behind the 6 cut mantra. It wasn't necessarily a mistake for the market to get so far ahead of the Fed's official outlook.  After all, the Fed has a history of cutting rates MUCH faster than its projections suggest.  But the decision would ultimately be dependent on continued progress on inflation, and more economic cooling. With the release of this week's inflation data, we now have two consecutive months that raise serious objections to the notion that the Fed will be able to cut any time soon.   This is a chart of the core Consumer Price Index (CPI) in year over year terms.  This is the inflation metric that the Fed wants to see at 2% and they've been clear in saying they can cut rates if they're confident that we'll get there.  It shows clear, substantial progress toward that goal:

  Mortgage Rate Watch

 4 weeks 1 day ago

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Mortgage Rates Back Above 7%
Even though Tuesday's consumer-oriented inflation report (CPI) had the biggest potential to cause drama for rates, it was today's wholesale inflation report that did the most damage. The Producer Price Index (PPI) showed wholesale inflation running hotter than expected by quite a wide margin overall (0.6% month-over-month versus a median forecast of 0.3%).  Even after stripping out more volatile food and energy prices (i.e. "core" inflation), PPI was up 0.3% versus forecasts of 0.2%.   These might seem like small numbers, but keep in mind that the Fed's inflation target is 2.0% annually at the core level.  Core readings of 0.4% in CPI and 0.3% in PPI pencil out to 4.8% and 3.6% respectively.  Inflation is the biggest concern for interest rates, so it's no surprise to see rates moving higher.  Today's increase brings the average to tier, conventional, 30yr fixed rate back above 7% for the first time in a week.

  Mortgage Rate Watch

 4 weeks 2 days ago

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Mortgage Rates Move Higher For 3rd Straight Day
Mortgage rates are nowhere near their highs from a few short weeks ago, let alone the much higher highs from late 2023, but they are at the highest levels this week after rising for the past 3 days. Monday's increase was small, forgettable, and random.  Tuesday's rates were driven higher by the market's reaction to the inflation data that came out this morning.  Markets were arguably still reacting to the implications of that data today, but less forcefully.  In fact, many lenders are essentially right in line with yesterday's latest levels. More importantly, the overall increase of the past 3 days is rather small compared to past examples of the market reacting to unexpectedly high inflation readings.  This could be a sign that investors increasingly expect economic data to shift in a rate-friendly manner.  At the risk of stating the obvious, data would actually need to make that shift in order for broad-based rate improvements. Inflation and labor market data is the most important in that regard, but tomorrow's Retail Sales report has frequently had an impact when it has come in far from the median forecast.  The Producer Price Index has also had an impact a few times recently and it will be released at the same time as Retail Sales (8:30am ET).

  Mortgage Rate Watch

 1 month ago

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2524 Hennepin Ave # A, Minneapolis, MN 55405

Check `n Go

55 W 1000 N Ste 5, Logan, UT 84321

Other Companies

Advance Cash Loans

435 George Wallace Dr, Gadsden, AL 35903

Advance America

913 Hwy. 321 North, Lenoir City, TN 37771

First Continental

3200 E Guasti Rd, Ontario, CA 91761

Security Finance

3670 Boca Chica Blvd Suite 1, Brownsville, TX 78521

ACE Cash Express

745 E Foothill Blvd, Rialto, CA 92376