The 15-year FRM also saw a decrease, averaging 6.17%, down from 6.25% last week and 6.30% a year ago. “Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week, and mortgage rates followed suit,” Sam Khater, Freddie Mac’s chief economist, said in the PMMS report. Khater also pointed … [Read more…]
Long-term mortgage rates fell for the fifth time in six weeks on Thursday.
Freddie Mac reported 6.89% as the average on a 30-year mortgage, down six basis points from last week.
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“Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week and mortgage rates followed suit,” said Sam Khater, Freddie Mac’s Chief Economist. We’re also seeing more inventory on the market, including a fair number of listings with price cuts, which is an encouraging sign for prospective buyers.”
The UrbanTurf Mortgage Rate Disclaimer: The rates reported by Freddie Mac for 30-year mortgages are usually the best rates that the most qualified borrowers can get, so borrowers or those considering refinancing should not necessarily read this news and think that they can go out and get a loan with the quoted interest rate.
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This article originally published at https://dc.urbanturf.com/articles/blog/mortgage_rates_tick_down/22505.
Default servicing experts have been optimistic that affordability concerns will be mild this year, but they consider some of the pressures on homeowners more worrisome than others.
When asked to distribute 100 points of risk among delinquency triggers, respondents to a recent Auction.com survey collectively assigned the greatest share of risk, at 37 points, to the “hidden” housing costs of property taxes and insurance.
Home purchasers often are most focused on upfront price and financing costs when they buy, so they can sometimes overlook ongoing expenses like T&I. That’s a concern for servicers, who often bear some responsibility for helping consumers manage these costs.
“Although the risk of rapidly rising delinquencies in the near term remains low, there are some signs of consumer and homeowner stress emerging,” Daren Blomquist, vice president of market economics at Auction.com, said in a report on the second quarter survey.
The online real estate marketplace surveyed a group of experts from depositories, agencies, government-sponsored enterprises, nonbanks and asset owners/investors for the survey. Auction.com found the first two groups to be particularly concerned about T&I.
Banks, government agencies and GSEs assigned 40 points of risk to taxes and insurance, in contrast to nonbanks, 34; and asset owners/investors, 25.
In addition to T&I, other concerns survey respondents collectively ranked highly included delinquencies rising in consumer debts outside the home loan market, 32; followed by rising unemployment, 15; commercial mortgage defaults, 10; and falling home prices, 6.
While these findings show there are a number of active performance concerns in the market, other answers to the survey explain why most respondents expect them to be mild.
Their projections suggest unemployment, which was pegged at 4.1% in the latest jobs report, will remain historically low.
Over three-quarters of respondents expect home price gains to persist throughout 2024.
As a result, survey participants anticipate high home equity levels that support performance, with serious-delinquent loans having an average combined loan-to-value ratio of 65%.
(Lower CLTVs reflect higher equity levels, and the traditional tolerance for higher ratios at origination is a maximum of 80%; but there are many risk-management vehicles designed to accommodate lower down-payments and elevated ratios above that level.)
Equity levels may shift over time, but right now respondents expect more than half or 51% of loans in loss mitigation to return to performing status given where they stand, with some typical adjustments for different types of mortgages.
Expectations are that 58% of loans purchased by government-sponsored enterprises Fannie Mae and Freddie will return to performing status after going through loss mitigation, followed by a little less than half government insured products at 49%, and 34% for non-agency mortgages.
The survey pegs the average combined LTVs for the different product types as follows: Fannie and Freddie loans, 58%; government insured mortgages, 49%; and non-agency products, 74%.
Around two-thirds or 67% of all respondents expect a rise in foreclosures to materialize this year.
More than half of the total, or 57%, anticipate foreclosures will increase 1% to 4% for their companies. Only 10% of the total project a foreclosure increase of 5% to 9%, with another 10% forecasting a drop of 5% or more. The rest of respondents anticipate foreclosures will either remain stable or decline by no more than 4%.
Survey participants in the non-agency market were unified in expectations that foreclosures will rise, with two-thirds anticipating an increase in the 1% to 4% range, and others anticipating a jump of 5% to 9%.
The most recent sideways slide began just before noon last Friday. Bonds had rallied in response to the jobs report with 10’s closing at 4.29%. Since then, there hasn’t been more than 4bps of movement in either direction, and the range has been even narrower 95% of the time. Part of the reason is the absence of new inspiration. Since the jobs report, there haven’t been any massively actionable economic reports or calendar events. Today’s calendar is similarly light. The 2nd day of Powell testimony is unlikely to offer any new insights and the 10yr Treasury auction–while a bit of a wild card for short term volatility–won’t impact the big picture with the all-important CPI on deck tomorrow morning.
Mortgage rates held steady over the past week despite recent signs of relief from the labor market, according to HousingWire’s Mortgage Rates Center. In large part because of the lack of clarity as to when the Federal Reserve will begin cutting the benchmark rate, mortgage rates remained above the 7% level.
The average 30-year rate for conforming loans sat at 7.11% on Tuesday, unchanged from one week ago. At this year’s peak, the same loan type reached 7.57% in April. Meanwhile, the 15-year conforming rate ceased its steep rise and reached 6.93% on Tuesday from 6.99% the previous week.
HousingWire Lead Analyst Logan Mohtashami said that mortgage rates historically move in connection with the 10-year yield, which “had a crazy move higher” two weeks ago but headed lower on Friday after the jobs report.
“Bond yields did fall, and pricing has gotten just a tad better, but it’s nothing of note,” Mohtashami said. “The spreads have kept mortgage rates more stable.”
According to Mohtashami, the spread between the 30-year mortgage rate and the 10-year yield has been an issue since 2022, and conditions worsened following the March 2023 banking crisis. He added, “If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be0.56% higher right now.”
Data from the U.S. Bureau of Labor Statistics released on Friday showed that total nonfarm payroll rose by 206,000 jobs in June, compared to 218,000 jobs in May (which was revised down from 272,000). Economists say it is good news for the Fed to start cutting rates, but there is uncertainty about when it will start.
“We continue to see headlines and data points driving rate movement in the absence of concrete evidence of when the Fed will start the rate-cutting cycle in the face of sticky inflation,” said Sarah Alvarez, vice president of mortgage banking at William Raveis Mortgage.
Fed Chairman Jerome Powell has stated that officials expect it will be appropriate to reduce the federal funds rate target range once they have gained greater confidence that inflation is moving sustainably toward the 2% target. And — stop us if you’ve heard this before — they are not there yet.
“Incoming data for the first quarter of this year did not support such greater confidence,” Powell said during the semiannual monetary policy report to the Congress on Tuesday morning. “The most recent inflation readings, however, have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2%.”
Besides monetary policy, uncertainties related to the presidential election are also impacting the markets, according to Alvarez.
“There is always a lot of uncertainty surrounding an election, and we saw the recent debate results push rates up more than expected,” Alvarez said. “However, as we continue to see data indicating that inflation and the economy are weakening, rates will start to come down more significantly. Anyone hoping for a straight ride down will be disappointed.”
Editor’s Note: Parts of this story were auto-populated using data from Curinos, a mortgage research firm that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our methodology here.
Mortgage rates have moved very little over the past week. Today’s 30-year fixed rate is down to 7.28% APR, according to data from Curinos analyzed by the MarketWatch Guides team. The 15-year fixed rate is down to 6.61% APR.
The U.S. Bureau of Labor Statistics released its monthly jobs report on Friday. While there were 206,000 jobs created in June, one-third of new hires were for government jobs and fewer jobs were created in April and May than originally announced. Employment data can affect mortgage rates in two main ways: by influencing the Federal Reserve’s interest rate adjustments and affecting home demand, which in turn impacts rates and pricing.
The Federal Reserve has previously indicated that it will not cut the federal funds rate, the short-term interest rate that impacts mortgage rates and financial markets in the U.S., until it sees signs that the economy is slowing, with inflation that remains at or under 2% and steady unemployment rates around 4%. The next economic report that economists are closely watching is this week’s Consumer Price Index, which reports price levels around the country and is one major indicator of inflation rates.
Here are today’s average mortgage rates:
30-year fixed mortgage rate: 7.28%
15-year fixed mortgage rate: 6.61%
5/6 ARM mortgage rate: 7.01%
Jumbo mortgage rate: 7.18%
Current Mortgage Rates
Product
Rate
Last Week
Change
30-Year Fixed Rate
7.28%
7.30%
-0.02
15-Year Fixed Rate
6.61%
6.68%
-0.07
5/6 ARM
7.01%
7.06%
-0.05
7/6 ARM
7.10%
7.14%
-0.04
10/6 ARM
7.27%
7.27%
0.00
30-Year Fixed Rate Jumbo
7.18%
7.17%
+0.01
30-Year Fixed Rate FHA
6.94%
6.96%
-0.02
30-Year Fixed Rate VA
6.98%
7.01%
-0.03
Disclaimer: The rates above are based on data from Curinos, LLC. All rate data is accurate as of Tuesday, July 09, 2024. Actual rates may vary.
>> View historical mortgage rate trends
Mortgage Rates for Home Purchase
30-year fixed-rate mortgages are down, -0.02
The average 30-year fixed-mortgage rate is 7.28%. Since the same time last week, the rate is down, changing -0.02 percentage points.
At the current average rate, you’ll pay $684.21 per month in principal and interest for every $100,000 you borrow. You’re paying less compared to last week when the average rate was 7.30%.
15-year fixed-rate mortgages are down, -0.07
The average rate you’ll pay for a 15-year fixed-mortgage is 6.61%, a decrease of-0.07 percentage points compared to last week.
Monthly payments on a 15-year fixed-mortgage at a rate of 6.61% will cost approximately $877.17 per $100,000 borrowed. With the rate of 6.68% last week, you would’ve paid $881.03 per month.
5/6 adjustable-rate mortgages are down, -0.05
The average rate on a 5/6 adjustable rate mortgage is 7.01%, a decrease of-0.05 percentage points over the last seven days.
Adjustable-rate mortgages, commonly referred to as ARMs, are mortgages with a fixed interest rate for a set period of time followed by a rate that adjusts on a regular basis. With a 5/6 ARM, the rate is fixed for the first 5 years and then adjusts every six months over the next 25 years.
Monthly payments on a 5/6 ARM at a rate of 7.01% will cost approximately $665.97 per $100,000 borrowed over the first 5 years of the loan.
Jumbo loan interest rates are up, +0.01
The average jumbo mortgage rate today is 7.18%, an increase of+0.01 percentage points over the past week.
Jumbo loans are mortgages that exceed loan limits set by the Federal Housing Finance Agency (FHFA) and funding criteria of Freddie Mac and Fannie Mae. This generally means that the amount of money borrowed is higher than $726,200.
Product
Monthly P&I per $100,000
Last Week
Change
30-Year Fixed Rate
$684.21
$685.57
-$1.36
15-Year Fixed Rate
$877.17
$881.03
-$3.86
5/6 ARM
$665.97
$669.34
-$3.37
7/6 ARM
$672.03
$674.73
-$2.70
10/6 ARM
$683.53
$683.53
$0.00
30-Year Fixed Rate Jumbo
$677.43
$676.76
+$0.67
30-Year Fixed Rate FHA
$661.28
$662.62
-$1.34
30-Year Fixed Rate VA
$663.96
$665.97
-$2.01
Note: Monthly payments on adjustable-rate mortgages are shown for the first five, seven and 10 years of the loan, respectively.
Factors That Affect Your Mortgage Rate
Mortgage rates change frequently based on the economic environment. Inflation, the federal funds rate, housing market conditions and other factors all play into how rates move from week-to-week and month-to-month.
But outside of macroeconomic trends, several other factors specific to the borrower will affect the mortgage interest rate. They include:
Financial situation: Mortgage lenders use past financial decisions of borrowers as a way to evaluate the risk of loaning money.
Loan amount and structure: The amount of money that bank or mortgage lender loans and its structure (including both the term and whether its a fixed-rate or adjustable-rate).
Location: Mortgage rates vary by where you are buying a home. Areas with more lenders, and thus more competition, may have lower rates. Foreclosure laws can also impact a lender’s risk, affecting rates.
Whether borrowers are first-time homebuyers: Oftentimes first-time homebuyer programs will offer new homeowners lower rates.
Lenders: Banks, credit unions and online lenders all may offer slightly different rates depending on their internal determination.
How To Shop for the Best Mortgage Rate
Comparison shopping for a mortgage can be overwhelming, but it’s shown to be worth the effort. Homeowners may be able to save between $600 and $1,200 annually by shopping around for the best rate, researchers found in a recent study by Freddie Mac. That’s why we put together steps on how to shop for the best mortgage rate.
1. Check credit scores and credit reports
A borrower’s credit situation will likely determine the type of mortgage they can pursue, as well as their rate. Conventional loans are typically only offered to borrowers with a credit score of 620 or higher, while FHA loans may be the best option for borrowers with a FICO score between 500 and 619. Additionally, individuals with higher credit scores are more likely to be offered a lower mortgage interest rate.
Mortgage lenders often review scores from the three major credit bureaus: Equifax, Experian and TransUnion. By viewing your scores ahead of lenders considering you for a loan, you can check for errors and even work to improve your score by paying down balances and limiting new credit cards and loans.
2. Know the options
There are four standard mortgage programs: conventional, FHA, VA and USDA. To get the best mortgage rate and increase your odds of approval, it’s important for potential borrowers to do their research and apply for the mortgage program that best fits their financial situation.
The table below describes each program, highlighting minimum credit score and down payment requirements.
Though conventional mortgages are most common, borrowers will also need to consider their repayment plan and term. Rates can be either fixed or adjustable and terms can range from 10 to 30 years, though most homeowners opt for a 15- or 30-year mortgage.
3. Compare quotes across multiple lenders
Shopping around for a mortgage goes beyond comparing rates online. We recommend reaching out to lenders directly to see the “real” rate as figures listed online may not be representative of a borrower’s particular situation. While most experts recommend getting quotes from three to five lenders, there is no limit on the number of mortgage companies you can apply with. In many cases, lenders will allow borrowers to prequalify for a mortgage and receive a tentative loan offer with no impact to their credit score.
After gathering your loan documents – including proof of income, assets and credit – borrowers may also apply for pre-approval. Pre-approval will let them know where they stand with lenders and may also improve negotiating power with home sellers.
4. Review loan estimates
To fully understand which lender is offering the cheapest loan overall, take a look at the loan estimate provided by each lender. A loan estimate will list not only the mortgage rate, but also a borrower’s annual percentage rate (APR), which includes the interest rate and other lender fees such as closing costs and discount points.
By comparing loan estimates across lenders, borrowers can see the full breakdown of their possible costs. One lender may offer lower interest rates, but higher fees and vice versa. Looking at the loan’s APR can give you a good apples-to-apples comparison between lenders that takes into account both rates and fees.
5. Consider negotiating with lenders on rates
Mortgage lenders want to do business. This means that borrowers may use competing offers as leverage to adjust fees and interest rates. Many lenders may not lower their offered rate by much, but even a few basis points may save borrowers more than they might think in the long run. For instance, the difference between 6.8% and 7.0% on a 30-year, fixed-rate $100,000 mortgage is roughly $5,000 over the life of the loan.
Expert Forecasts for Mortgage Rates
Mortgage rates have cooled significantly over the past several months. After the 30-year fixed-rate mortgage hit 8% last October, it ended 2023 closer to 7%. In fact, the average for Q4 2023 was 7.3%.
Analysts with Fannie Mae and the Mortgage Bankers Association (MBA) both project that rates will fall going into 2024 and throughout next year.
Fannie Mae economists expect rates to drop more quickly, falling below 6% by Q4 2024. Meanwhile, the MBA’s forecast for Q4 2024 is 6.1% and 5.9% for Q1 2025.
More Mortgage Resources
Methodology
Every weekday, MarketWatch Guides provides readers with the latest rates on 11 different types of mortgages. Data for these daily averages comes from Curinos, LLC, a leading provider of mortgage research that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our comprehensive methodology here. Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
Today’s playbook was fairly straightforward with bonds being likely to move in the direction suggested by the jobs report. The only challenge would have been the presence of mixed messages (i.e. a big beat in the job count paired with a big miss in the unemployment rate). While there was indeed a beat in the job count, it wasn’t big. It was also offset by much larger negative revisions. Unemployment ticked slightly higher. Wages hit their forecast of 0.3 vs 0.4 previously. All told, it suggests more of normalizing labor market with a hint of softening as opposed to a surprisingly resilient labor market indicated by last month’s jobs report. Bonds like it and have now erased all of the losses seen since last week’s presidential debate.
As a reminder, while there was a lot of attention on the presidential debate as scapegoat for last Friday’s bond sell-off, we were bigger fans of the month-end positioning explanation.
“Data dependent” is one of the most common phrases heard from the Federal Reserve these days when it comes to rate-setting policy. And while the Fed doesn’t directly dictate mortgage rates, the bond market tends to trade the same data that the Fed cares about.
Today’s key report, the ISM Services index, isn’t quite at the top of the Fed’s list, but it’s a longstanding market mover when it comes to bonds and, thus, rates. Today’s installment was much weaker than expected. Weak data correlates with lower rates, all other things being equal.
Bonds improved immediately after the release. This allowed mortgage lenders to set lower rates today. Some lenders had already published their initial rates for the day and several of them ended up issuing positive reprices before the end of the day.
The bond market is closed tomorrow for the holiday, but will be back to digest an even more important economic report on Friday morning: the big jobs report.
While inventory growth this week slowed to 6,803 —well below my weekly target level of 11,000 -17,000 with elevated mortgage rates — the fact that we hit this target level five times this year versus zero last year is a big reason why 2024 has been a much better year for housing than 2023. As we can see below, it’s a much healthier year in inventory growth data than in 2023.
Weekly inventory change (June 29-July 5): Inventory rose from 645,770 to 652,573
The same week last year (June 30-July 7), Inventory rose from 466,534 to 466,001
The all-time inventory bottom was in 2022 at 240,497
This week is the inventory peak for 2024 at 652,573
For some context, active listings for this week in 2015 were 1,183,882
New listings data
We are at the seasonal peak period for new listings. We will soon be getting into the weekly decline period of this data line, and while we have showed growth year over year, we never got to my minimum target level of 80,000. Here are the new listings for last week over the past few years:
2024 71,181
2023: 58,289
2022: 89,221
Price-cut percentage
In an average year, one-third of all homes take a price cut — this is standard housing activity. As rates have stayed elevated, the price-cut percentage is higher than in the last two years, and certain pockets of the U.S. have higher inventory data than the national data.
A few weeks ago, on the HousingWire Daily podcast, I discussed that the price-growth data will cool down in the second half of the year.
Here are the price-cut percentages for last week over the previous few years:
2024: 38%
2023: 33%
2022: 32%
Pending sales
Below is the Altos Research weekly pending contract data year-over-year to show real-time demand. With more sellers who are buyers, we have a tad more demand this year. This week showed very little year-over-year growth and there is also a holiday week effect here. For the entire year, we have shown a tiny bit of growth in the pending contracts; this data line can grow year over year when mortgage rates fall, but we haven’t had that happen so far in 2024 in any meaningful way with duration.
So far, our pending contract data is still showing growth:
2024: 381,057
2023: 381,036
2022: 420,816
10-year yield and mortgage rates
Two weeks ago, the 10-year yield had a crazy move higher, even with softer inflation data. Last week, we returned close to recent lows. Here is how the 10-year yield acted with jobs week, which once again is showing the labor market getting softer but not breaking yet.
Then we had Jobs Friday, in which the headline number looked fine, but the internal labor reports lately look softer, which is what the Federal Reserve has wanted all along. I wrote about the recent jobs week data here.
After the jobs report, bond yields headed lower and trended lower the entire day on Friday, July 5, which you can see in the chart below — dragging mortgage rates lower with them.
Mortgage spreads
The spread between the 30-year mortgage rate and the 10-year yield has been an issue since 2022, and things got worse after the March 2023 banking crisis. However, this year, spreads have improved.
If we took the worst levels of the spreads from 2023 and incorporated those today, mortgage rates would be 0.56% higher right now. While we are far from being average with the spreads, the fact that we have seen this improvement is a plus this year.
Purchase application data
The three-week winning streak of purchase application data ended last week as rates had risen in the previous weeks. This shows once again how even weekly moves up and down can flip this data line from positive to negative.
Since the onset of falling mortgage rates in November 2023, we’ve seen 15 positive prints, 14 negative prints and two flat prints in the week-to-week data. However, as mortgage rates began to rise earlier this year, we observed a decline in demand. The year-to-date data for 2024 is unfavorable, with 9 positive prints,14 negative prints and twoflat prints. If mortgage rates can head lower and stay lower with duration, we can grow application data purely based on the fact that we are working from the lowest levels ever once adjusting to our workforce growth.
The week ahead: Inflation, Powell testimony, auctions and fed speeches
It’s inflation week again. We have CPI inflation and PPI inflation reports coming up on Thursday and Friday. Fed Chairman Jerome Powell will give testimony before Congress on Tuesday and we will also have more Fed presidents speaking next week. The key is to see if any recent labor data softness changes their tune.
We will also have a few bond auctions. It’s hard to break under 4.20% on the 10-year yield, so we shall see if this week that happens or if we still stay in the range between 4.20% and 4.50%.
Fewer prospective mortgage borrowers pulled the trigger in June, according to a new report from Mortgage Capital Trading.
Mortgage rate locks decreased 7.84% in June compared to the previous month.
This drop follows a brief uptick in volume at the beginning of the traditional buying season, suggesting a continuing stalemate between limited housing supply and higher interest rates (they were 7.11% on Friday), MCT said this week.
While purchase locks fell 8.99%, refinances increased by 11.56%. Overall, on a year-over-year basis, volumes in June increased 6.11%.
In a statement, MCT’s Andrew Rhodes, the company’s head of trading, said June’s economic reports are expected to play a critical role in shaping the Federal Reserve‘s next moves.
“If the upcoming nonfarm payroll report and Consumer Price Index (CPI) continue to align with predictions, and these economic indicators continue to show progress, we could see one or two rate cuts by the end of the year,” he said.
On Friday, the jobs report showed 206,000 new jobs were created, above the expected figure of 189,000 but a meaningful decline from prior months.
Traders on Friday were pricing in two rate cuts in 2024, starting in September.