Mortgage Rates Begin Downward Move

Mortgage rates plunge to the lowest level in more than a year after weak employment report.

NEWS EXCERPT, CNBC, August 2, 2024: The average rate on the popular 30-year fixed mortgage dropped over 20 basis points to under 6.5% Friday, according to Mortgage News Daily.

OUR TAKE: Although a buyer should always consider the 'true' cost to obtain the lower rates (application fees, mortgage points paid at Closing, etc) the referenced 6.5% rate is the lowest average rate for that 3-year mortgage type since April 2023. The 15-year fixed rate fell to under 5.9%, its lowest level since early May 2023. And this is before the Federal Reserve actually cuts the Fed funds rate. Thus, the lenders appear to have suitable embedded margins (profits) to entice consumers when they’d like — again, ‘before’ the Fed cuts.

Similarly, and inversely, some lenders were quick to hike rates well in excess of the 'actual' Fed funds rate hikes back in 2022...again, clearly (and partly due to limited liquidity leading to 'supply and demand' formulations) the mortgage industry has its own set of rate-setting strategies that ‘only sorta’ mimic the true Fed funds rate.

An Opinion, Not Advice: Do your own due diligence on the ‘total’ costs of your mortgage actions, and potentially consider these Q’s (esp. last one!):

• Am I aware that each re-financing event may cost a few thousand dollars (or more) in fees or points to save a few hundred per month?

• Is it better to let most of the Fed’s presumed 5-6+ rate cuts occur before re-financing?

• Have I shopped around for lower rates, fees, shorter loan terms, etc?

• Have I subscribed to Housing.buzz yet?

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