This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. Polly data is calculated using actual locked rates. Rates are inclusive of locks that occur below par, at par and therefore consider discounts and rebates.
For the week of Oct 11th to Oct 17th, interest rates increased slightly. In general, higher rates reflect the strength in the economy that is supportive of the housing market. But notably, as compared to a year ago, rates are more than one percentage point lower, and potential homebuyers can stand to benefit.
Equity markets rallied on the news of the September rate cut. Investors believe reductions in the federal funds rate (which is a prime rate that helps to dictate mortgage rates, auto loans, credit card rates, and home equity lines of credit) will spur increases in investment and consumption, guiding the economy to a so-called soft landing instead of a recession.
After the September meeting, most members of the Federal Reserve Board indicated they would also favor cutting rates by 25 basis points at each of their upcoming November and December meetings.
Between today’s inflation news and the unexpectedly sunny jobs report on Oct. 4, investors and markets have a lot of news to digest as they consider what path interest rates will take in the months ahead. Many continue to believe that we may well see two 25-basis-point cuts by the end of 2024.
Fed Watch:
Target rate (in bps) possibilities, according to the CME Group:
| Upcoming Federal Reserve Meeting |
Current (4.75% - 5.00%) |
0.25% Reduction (4.50% - 4.75%) |
0.50% Reduction (4.25% - 4.50%) |
0.75% Reduction (4.00% - 4.25%) |
| November 7 | 9.1% | 90.9% | 0% | 0% |
| December 18 | 1.4% | 21.4% | 77.2% | 0% |
| January 29 | 0.4% | 6.9% | 36.7% | 56.1% |
Optimal Blue’s Production Metrics:
The latest NY Fed Survey of Consumer Finances is slightly worrying as it reports the percentage of households who think they will be unable to meet their debt obligations over the next three months is 14%. This is the highest percentage since 16% in 4/20. The percentage has steadily risen from a low of 10% in 2021 to 12% in 2023, to now 14%. More households continue to struggle.
- Elliot Eisenberg, Ph.D. , Economist
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
1. HomeSURE Advantage is not a final loan approval or a guarantee to lend. A Commitment Letter is based on verified information and documentation provided by the borrower and a review of the borrower's credit report. The interest rate and type of mortgage used to approve borrower for a specified loan amount is subject to change, which may also change the terms of approval. If the interest rate used for credit approval has changed, borrower may need to re-qualify. Information provided by borrower is subject to review and all other loan conditions must be met. After a borrower has chosen a home and the purchase offer has been accepted, final loan approval will be contingent upon obtaining an acceptable appraisal and title commitment. Additional documentation and loan qualifications may be required. Not all borrowers will qualify. May not be available in all areas.
2. Some restrictions may apply. The Closing Guarantee is only available on HomeSURE Advantage-designated, conventional, FHA and VA loans with a valid Commitment Letter issued by Prosperity Home Mortgage, LLC (“Prosperity”), in writing prior to execution of fully ratified sales contract. Some jumbo loan programs may be eligible at the sole discretion of Prosperity. Brokered jumbo loans are NOT eligible, and any jumbo loan programs requiring investor preapproval are NOT eligible. The Closing Guarantee is NOT available on renovation loan products, loans for the purchase of cooperative housing units, or loans involving any sort or type of bond, grant, down payment assistance, mortgage credit certificate, or any other non-profit, municipal, or housing authority program. For conventional loans, FHA loans, and VA loans, an acceptable appraisal must be received and approved by Prosperity at least ten (10) business days prior to closing or loan is not eligible for Closing Guarantee. The Commitment Agreement has an expiration date, which, solely for purposes of eligibility for the Closing Guarantee, may not be extended. The loan must close on or before the expiration date contained in the initial Commitment Agreement issued by Prosperity. Subject to acceptable appraisal of property value at or above contract sales price. The Closing Guarantee is subject to the satisfaction by the Borrower(s) of all loan conditions identified in the Commitment Agreement at least three (3) business days prior to closing or as otherwise determined by Prosperity in its sole discretion. The Closing Guarantee is not valid if either Borrower(s) or Seller terminate the purchase contract, extend the settlement date, or otherwise choose not to consummate the transaction for any reason whatsoever. The Closing Guarantee is invalid if there is a substantial change in the Borrower’s financial condition or to the terms of either the loan, loan product, loan type, or the purchase contract between Borrower(s) and Seller. The Closing Guarantee is void in the event closing is delayed or cancelled as a direct result of an unforeseen disruption of service; an act of God; a national, state, or local emergency; pandemic; natural disaster; or other public health declaration. This offer is void where prohibited and is non-transferable, subject to the terms herein, and valid on all complete applications received on or before 12/31/2024. The Closing Guarantee is limited solely to the transaction and subject property identified herein.
Interest rate and annual percentage rate (APR) are based on current market conditions as of 10/17/2024, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 10/17/2024 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac's economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac's business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an "as is" basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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