Providing you current financial news and other relevant info as you set your homeownership goals.

The Market seems to be driving rates in the wrong direction.

Mortgage rates are going in the wrong direction and have continued that trend over the last few weeks. Good news though, Fannie Mae and Freddie Mac is allowing buyer’s agent commission to be paid thru seller concession and that would be over and above the allowable concession limits which could be a big help in some scenarios.

Key Highlights:

  • Brutal weeks for rates.
  • Housing starts
  • NEW: Housing Market Report as of April 2024

Brutal weeks for rates.

Last week was brutal for the mortgage rate market as inflation continues to persist and unemployment has gone down. Both point to a stronger than expected economy and strong consumer appetite for spending. The odds of a Fed rate cut which we all have been hoping for has swiftly dropped to below 20% for the month of June which is when we had expected a cut. This now marks the 2nd June that we had hoped to see a rate cut. 

Was the market’s reaction and the media’s overall reading of this data an overreaction? We shall see next week when the Fed’s true favorite measure of inflation comes out, the Core PCE reading (personal consumption expenditure). This is the reading they try to keep at or near 2%. The last Fed meeting in March Fed Chair Powell said, readings are still within expectations and that they still expected 3 rate cuts this year. Has that sentiment changed? Well, in a press conference on April 16 he seemed to indicate the sentiment may be changing pending next week’s PCE reading, read more at the free WSJ article here.

Important things to watch, PCE report next Friday the 26th, if this moves from 2.78% downward or stays the same that could bode well for the May 1st Fed meeting. Not that we will get a cut at this meeting, but it could keep the Fed’s sentiment toward at least 2 cuts this year, likely more toward July or September. 

Rates have moved from up over .50% in just three weeks. 

Housing Starts (builders starting new homes)

Housing starts are down a bit over the last quarter. This is making our inventory (houses for sale) pressure even more pressurized. We will keep an eye on this. 

This period right now, may be beneficial for you buyers while yes, there is limited homes for sale and higher rates, there is less buyer activity in the market today due to these things. So, if you can find a home, afford the monthly payment for now, then it is still a good time to buy. You can always refinance the rate, you can’t change the purchase price which is sure to be higher a year from now. Buy low and hold on to that home of your dreams, or at least one that you can begin to build equity in.

Don’t lose heart, let’s keep getting out there, remain persistent. The persistent qualified buyer gets the house.

What’s moving rates in the days ahead:

  • Tuesday: Housing Starts, Building Permits
  • Wednesday: Fed Beige Book*
  • Thursday: Initial Jobless Claims*, Fed Presidents Speak*
  • Friday: Fed Presidents Speak*

More to explore

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