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What’s Ahead For Mortgage Rates This Week – November 27, 2023

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There will be a very light week with the Holiday season approaching. The only notable reports to have come out for the week are the U.S. economic leading indicators, with nothing scheduled around Thanksgiving weekend. The median forecast for the leading indicators has shown that with the rest of the CPI and PPI data among other economic statistics, the economy does seem to be heading towards a soft landing as the Federal Reserve had initially targeted. The most notable changes are lending partners cutting rates with the potential for shifting economic policies and rate cuts in the future.

U.S. Leading Economic Indicators

The numbers: The leading economic index declined 0.8% in October and fell for the 19th month in a row, but the U.S. economy doesn’t appear any closer to a recession than when the losing streak began.

Primary Mortgage Market Survey Index

The last 4 weeks have seen a week-to-week decline in rates.

  • 15-Yr FRM rates seeing a week-to-week decrease by -0.09% with the current rate at 6.67%.
  • 30-Yr FRM rates seeing a week-to-week decrease by -0.15% with the current rate at 7.29%.

MND Rate Index

  • 30-Yr FHA rates decreased week-to-week, and we’re seeing a -0.12% decrease for this week. Current rates at 6.65%.
  • 30-Yr VA rates decreased week-to-week, and we’re seeing a -0.13% decrease for this week. Current rates at 6.65%

Jobless Claims
U.S. jobless claims drop to a five-week low of 209,000.
Initial Claims have decreased to 209,000 compared to the expected claims of 229,000. The prior week was 218,000.

What’s Ahead
With Thanksgiving in the rearview, we are also looking at many Federal Reserve chairmen speaking next week along with Q3 GDP data release reports. There is also Personal Income Spending and PCE Index which will demonstrate the strength of the economy at a personal level. Lastly, ISM manufacturing is a small but still worthwhile report to indicate production capacity for many trade aspects.

What’s Ahead For Mortgage Rates This Week – November 20, 2023

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With the release of the CPI and PPI data, much of the broader market has been anticipating the potential cooling of inflation numbers month-to-month and those expectations have been met. There’s a consistent trend of inflation slowing down which brings a greater potential for the end of any rate hikes from the Federal Reserve, signaling a soft-landing for the economy which has been touted by Jerome Powell. With a soft landing, it does also signal a strong potential for the Federal Reserve to begin lowering rates in the coming future. 

Consumer Price Index

Despite the report beating inflation expectations and leading to optimistic outcomes for a future soft-landing for the economy, there is still plenty to be cautious about with the reports also signaling the largest reduction was due to the price of gasoline declining significantly from the prior month. The overall cost of living has remained stable and not increased, but there is still plenty to look out for with the coming reports.

?       The consumer price index was flat in October from the previous month but increased 3.2% from a year ago.

?       Excluding volatile food and energy prices, the core CPI rose 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual rate was the smallest increase since September 2021.

?       The flat reading on the headline CPI came as energy prices declined 2.5% for the month, offsetting a 0.3% increase in the food index.

Producer Price Index
The Producer Price Index for final demand fell 0.5 percent in October, seasonally adjusted, after advancing 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. (See Table A). The October decline is the largest decrease in final demand prices since a 1.2-percent drop in April 2020. On an unadjusted basis, the index for final demand rose 1.3 percent for the 12 months ended in October.

Primary Mortgage Market Survey Index
The last 3 weeks have seen a week-to-week decline in rates.

?       15-Yr FRM rates seeing a week-to-week decrease by -0.05% with the current rate at 6.76%.

?       30-Yr FRM rates seeing a week-to-week decrease by -0.06% with the current rate at 7.44%

MND Rate Index

?       30-Yr FHA rates increased week to week seeing a -0.21% increase for this week. Current rates at 6.70%

?       30-Yr VA  rates increased week to week seeing a -0.02% increase for this week. Current rates at 6.72%

Jobless Claims
Weekly jobless claims have exceeded expectations this week, with it showing a slight uptrend. Initial Claims have increased to 231,000 compared to the expected claims of 220,000. The prior week was 218,000. 

What’s Ahead
Thanksgiving week, being next week will see a reduction in the data release schedule. The largest ones will be U.S. leading economic indicator reports, with the usual initial jobless claims, and lastly the final consumer sentiment report for the quarter.

What’s Ahead For Mortgage Rates This Week – November 13, 2023

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The week following the FOMC rate decision meetings are typically very light, with the two most influential releases being the University of Michigan Consumer Sentiment and the weekly Job Claims reports. The more positive news is mortgage lending rates have been on the decline in the last two weeks.

Consumer Credit Reports

Consumer sentiment fell in November for the fourth month in a row due to tensions with the Middle East and there is lingering hawkishness from the Federal Reserve, which could spell continued rate hikes in the future.

The preliminary reading of the sentiment survey declined to 60.4 from 63.8 in October, the University of Michigan said Friday, making it the weakest reading since May.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates seeing a week-to-week decrease by -0.22% with the current rate at 6.81%.
  •  30-Yr FRM rates seeing a week-to-week decrease by -0.26% with the current rate at 7.5%

MND Rate Index

  • 30-Yr FHA rates increased week to week seeing a 0.20% increase for this week. Current rates at 6.91%
  • 30-Yr VA rates increased week to week seeing a 0.04% increase for this week. Current rates at 6.74%

Jobless Claims

The weekly jobless claims report from the Labor Department on Thursday also showed unemployment rolls rising to a six-month high.

Initial Claims have decreased to 217,000 compared to the expected claims of 220,000. The prior week was 220,000.

What’s Ahead

The next week will have much bigger market impacting data reports with the releases of CPI and PPI. There will also be a significant amount of the Federal Reserve members speaking throughout the week on rate policy decisions.

What’s Ahead For Mortgage Rates This Week – October 30, 2023

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This week’s most significant data offered preliminary numbers for manufacturing and services PMI (Purchasing Managers Index). Both can serve as a forward indicator for the economy while providing insight into the current state of the cost of living for the service industry. While manufacturing met an expected rise for the end of October, services saw a contraction, falling to 46.6 from 49.3. Readings below 50.0 can be a sign of a downturn for the economy, particularly given the time of the year.

Mortgage Applications & Rates Indices
MBA Mortgage Applications Index saw a reduction of -1.0% in applications for the week, with rates once again increasing again week over week.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates are seeing a week-to-week increase by 0.11% with the current rate at 03%.
  • 30-Yr FRM rates are seeing a week-to-week increase by 0.16% with the current rate at 79%

MND Rate Index

  • 30-Yr FHA rates increased week to week with a -0.08% decrease for this week. Current rates at 32%
  • 30-Yr VA rates increased week to week with a -0.11% decrease for this week. Current rates at 33%

Personal Income & Spending

Personal income increased $77.8 billion (0.3 percent at a monthly rate) in September, according to estimates released today by the Bureau of Economic Analysis (table 2 and table 3). Disposable personal income (DPI), which is personal income less personal current taxes, increased $56.1 billion (0.3 percent), and personal consumption expenditures (PCE) increased $138.7 billion (0.7 percent).

  • The PCE price index increased 0.4 percent.
  • Excluding food and energy, the PCE price index increased 0.3 percent.

Key point: Personal income increased in September and spending accordingly rose, moving into October. This increase in income and spending is expected moving into the Holiday season. This is a strong sign for the Advanced GDP numbers for the remainder of the year.

Job Claims
Those who applied for unemployment benefits last week fell to a nine-month low of 188,000, subverting expectations that layoffs would rise as the U.S. interest rates continued to increase.
Initial Claims were 210,000 compared to the expected claims of 210,000. The prior week was at 211,000.

What’s Ahead
This week’s scheduled economic reports include ISM manufacturing data, S&P U.S. Manufacturing PMI, and Job Openings. The stronger data points of U.S. non-farm payrolls are coming at the end of the week on Friday.

What’s Ahead For Mortgage Rates This Week – October 23, 2023

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This week featured the usual retail sales report which shows consumer demand and as well as an indicator of the velocity of money, not only for consumers but business to business as well. An increase would show an increase in national and local increase in economic activity, which is important as we move into Q4 of the year; where the holiday season is expected to see an increase in consumer activity.

Retail Sales

Retail sales have exceeded expectations this month showing month-to-month increases across the board:

  • Retail sales are up 0.7% from the previous month with an expected increase of 0.3%.
  • Retail sales with auto removed show an increase of 0.6% compared to an expected 0.2% increase.
  • Business inventories are also above the expected increase at 0.4% compared to 0.3%.

Housing Starts & Building Permits

U.S. Housing Starts rebound in September after a sharp drop in the prior month. Largely, economists are feeling that builders have been losing confidence since rates have peaked over 7% and housing is expected to trend lower until the end of the year.

  • Construction of new U.S. homes rebounded 7% in September to an annual pace of 1.36 million units after a sharp 1.5% drop in the prior month, the Commerce Department said Wednesday.
  • Building permits, a sign of future construction, fell 4.4% to a 1.47 million rate.
  • Existing home sales beat expected sales with 3.98 million sales compared to the expected 3.90 million sales.

Key point: The pace of construction for single-family homes in September has risen by 3.2% and apartment building construction rose by 17.1%

Mortgage Applications Increased for the Month of October

MBA Mortgage Applications Increase, a measure of mortgage loan application volume again.

Primary Mortgage Market Survey Index

  • 15-Yr FRM rates seeing a week-to-week increase by 0.03% with the rates now at 92%.
  • 30-Yr FRM rates seeing a week-to-week increase by 0.06% with the current rate at 63%

MND Rate Index

  • 30-Yr FHA rates increased week to week seeing a 0.28% basis point increase. Current rates at 40%
  • 30-Yr VA rates increased week to week seeing a 0.30% basis point increase. Current rates at 44%

Job Claims

Those who applied for unemployment benefits last week fell to a nine-month low of 188,000, subverting expectations that layoffs would rise as the U.S. interest rates continued to increase.

Initial Claims were 188,000 compared to the expected claims of 211,000. The prior month was 211,000.

What’s Ahead

This week’s scheduled economic reports include PMI data, along with new home sales. There will also be a national GDP data release which can give an indication of the growth of markets and economy as a whole. Lastly, Personal Income and Spending will be at the tail of the week along with PCE Index numbers.

What’s Ahead For Mortgage Rates This Week – October 2, 2023

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Last week, consumers were treated to several indicators on inflation that not only paint a picture of the economy’s health but also give the Fed more information to work with as it continues to aim for a soft landing.

August Sees a Slight Upward Trend in Inflation

This week, the personal consumption expenditures price index, which excludes more volatile commodities like food and energy, increased 0.1 percent for the month. This is lower than the expected value of 0.2 percent, which indicates that the rising interest rates are starting to have an impact on the economy as the Fed continues to work to bring down inflation.

When compared to the previous 12 months, the price index was up 3.9 percent. This matched expectations and shows that inflation could finally be turning a corner. In addition, consumer spending rose 0.4 percent in August, which is down sharply from 0.9 percent in July. This is another indicator that higher interest rates are having an impact on consumers, who are finally pulling back on their spending.

As the month continues to progress, a lot of people will wait and see how the Fed’s decision to hold interest rates steady will impact the economy. Those looking for houses will probably be excited that interest rates were held steady, but it will be interesting to see how this decision impacts the fight against inflation.

Mortgage Rates Continue To Rise

This week, the 30-year fixed mortgage rate sits at around 7.59 percent on average, which remains one of the highest rates in decades. In August, the average rate was 7.18 percent, indicating that rates have gone up sharply. This is also up slightly from the previous week, where the average 30-year fixed rate was 7.51 percent.

What's Ahead For Mortgage Rates This Week - October 2, 2023In addition, 15-year fixed mortgage rates have gone up as well, with the national average sitting at around 6.82 percent. This is up from last week, when the average 15-year fixed was 6.51 percent. This is also up slightly from August, where the rates hovered around 5.84 percent.

Because the Federal Reserve decided to hold interest rates study, many home buyers are hoping that mortgage rates will stabilize for a couple of months. It remains to be seen if that will happen.

Consumer Sentiment Might Be Stabilizing

The consumer sentiment report from the University of Michigan is stabilizing, with numbers for September coming in at around 68.1. While this is a slight dip from August’s average numbers, the numbers for September are starting to rise.

Consumers might be starting to relax a little bit because inflationary numbers are starting to come down. For consumer sentiment to rise further, mortgage rates might have to come down without contributing to a spike in inflation or home prices.

This dip implies that despite the decreasing inflation rates, there remains a cloud of uncertainty amongst consumers. This could be attributed to potential interest rate hikes and a subtle slowing down of the job market. The prevailing mood is still optimistic, but the trend is shifting.

Looking To Next Week

Next week, the unemployment data is going to be released, as initial jobless numbers are going to come in. This is a key indicator because rising interest rates generally lead to more layoffs, which could jeopardize the Fed’s goal of a soft landing.