President Biden and the Democrats have nearly destroyed the housing market. So, some bright light in the sector is just so needed.
Mortgage rates dropped to their lowest level since April 2023 on Friday, following a weak jobs report that led to lower bond yields and increased expectations for an interest rate cut by the Federal Reserve in September.
Hey! Guess what’s coming down! Mortgage Interest Rates are the lowest they have been in a long while! 6.05% VA, 6.10% FHA, 6.5% Conventional 30 yr, and 6.05% for a 15 yr Conventional! Looking to Buy? Let’s start the conversation! -Windermere Northwest Living pic.twitter.com/CTtP4p5P5G
— David Thelin (@Thelin1973) August 2, 2024
The average rate for a 30-year fixed mortgage fell by 0.22 percentage points to 6.4%, according to Mortgage News Daily. This marks the lowest average rate for this type of loan since April 2023, based on Freddie Mac data.
Mike Fratantoni, Chief Economist at the Mortgage Bankers Association, noted, “The market is adjusting ahead of the Fed, lowering longer-term rates, including mortgage rates. This should lead to more home purchases and an increase in refinancing activity.”
The decline in mortgage rates follows a report from the Labor Department showing that job growth slowed unexpectedly in July, with fewer jobs added than anticipated and the unemployment rate rising to its highest level since late 2021. This report led to a drop in stock prices and a significant decrease in the 10-year U.S. Treasury yields, which influence mortgage rates.
This decrease in mortgage rates could provide some relief to prospective homebuyers, many of whom have been sidelined due to high borrowing costs and record-high home prices as of June. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), suggested that mortgage rates could drop even further in the coming weeks. He pointed out that if mortgage rates followed the 1 percentage-point drop in the 10-year bond yield, which fell to 3.8% from 4.8% a few months ago, borrowers could save $300 a month on a typical home loan.
Average 30-Year Mortgage Rate in the US…
1970s: 8.9%
1980s: 12.7%
1990s: 8.1%
2000s: 6.3%
2010s: 4.1%
2020s: 4.9%
—
All-Time Low (Jan 2021): 2.65%
2023 Peak (Oct 2023): 7.79%
Today’s Rate: 6.73% (lowest since February)https://t.co/l5IYmkeySJ pic.twitter.com/1w3MfDOGYj— Charlie Bilello (@charliebilello) August 1, 2024
Yun encouraged homebuyers who were previously priced out to reassess their ability to enter the market if they have stable employment.
Economists are now speculating that the Federal Reserve may need to implement more substantial rate cuts than initially expected due to the weakening labor market. Some Wall Street economists predict a 0.5 percentage point reduction in the Fed’s benchmark rate at its September meeting, compared to previous forecasts of a 0.25 percentage point cut.
The Federal Reserve held its benchmark interest rate steady during its last meeting on Wednesday but indicated that it might start reducing borrowing costs in September if inflation continues to decrease. Fed Chair Jerome Powell also mentioned that officials are monitoring the labor market for signs of weakness, which could trigger further rate cuts.
📷 News Update: August 2, 2024 📷
Mortgage rates are coming down, just like we predicted for our clients! Now is the perfect time to act. Whether you’re looking to refinance, purchase a new home, or sell your current home, this is the moment to seize.
📷 Current Rates:
30 Yr.… pic.twitter.com/CCve1m1e8Z
— The Trading Agent (@thetradingagent) August 2, 2024
In light of the weaker-than-expected jobs report, analysts on Wall Street are now forecasting several additional rate cuts throughout 2024 and possibly more significant reductions than previously anticipated. Capital Economics, in a Friday report, stated, “We now expect 25 basis point cuts at each of the remaining three meetings this year and will be watching for signs that a larger 50 basis point move might be needed, depending on how quickly the economy and labor market weaken.”
But, knowing that any rate cuts are political in order to help Kamala Harris up against Trump, people see through it all. We all know the rates will be thrust higher once Trump gets into office. This is unless of course Trump moves on the Federal Reserve to bring some sanity to the organization.
Major Points:
- The average rate for a 30-year fixed mortgage fell to 6.4%, the lowest since April 2023, following a weak jobs report.
- The Labor Department’s report showed a significant slowdown in job growth and a rise in the unemployment rate, leading to lower bond yields and mortgage rates.
- Lawrence Yun from NAR suggests that mortgage rates might decrease further, potentially saving borrowers $300 a month if rates drop similarly to the 10-year bond yield.
- Economists now predict the Federal Reserve might cut its benchmark rate by 0.5 percentage points in September, more than the previously expected 0.25 percentage point reduction.
- Analysts anticipate additional rate cuts throughout 2024, with possible deeper reductions depending on economic and labor market conditions.
Conner T – Reprinted with permission of Whatfinger News
