Weekly Mortgage Report – May 16, 2024

Rates Head Down for a Second Week, Inflation Eases Slightly

Mortgage rates decreased for the second consecutive week, another seven basis points last week and a total of twenty basis points over the past two weeks, according to the Freddie Mac Primary Mortgage Market Survey released May 16th. Given the news that inflation eased slightly, the 10-year Treasury yield dipped leading to lower mortgage rates. The decrease in rates, albeit small, may provide a bit more wiggle room in the budgets of prospective homebuyers.

Mortgage applications increased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 10, 2024. “Treasury yields continued to move lower last week, and mortgage rates declined for the second week in a row, with the 30-year fixed rate down 10 basis points to the lowest level since early April,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. Added Kan, “While the downward move in rates benefits prospective homebuyers, mortgage rates are still much higher than they were a year ago, while for-sale inventory remains tight.”

Inflation eased slightly in April, providing at least a bit of relief for consumers while still holding above levels that would suggest a cut in interest rates is imminent. The consumer price index, a broad measure of how much goods and services cost at the cash register, increased 0.3% from March, the Labor Department’s Bureau of Labor Statistics reported Wednesday. On a 12-month basis, however, the CPI increased 3.4%, in line with expectations. The core 12-month inflation reading was the lowest since April 2021 while the monthly increase was the smallest since December. Markets reacted positively after the CPI release and futures traders raised the implied probability that the Federal Reserve would start cutting interest rates in September.

Consumer sentiment plunged to the lowest level in six months as price increases reaccelerated, according to the latest University of Michigan survey of consumers, released Friday. Additionally, consumers are bracing for even higher price increases in the year ahead compared to readings from prior months, the survey found. The gauge plunged 13% from April’s 77.2% reading, to 67.4%. That’s the biggest one-month drop since mid-2021. The survey suggests that the recent optimism consumers had about the state of the economy is waning. Beyond inflation, they’re also concerned about higher rates of unemployment, Joanne Hsu, the university’s Surveys of Consumers director, said in a release.

“A good reason why you may want to offer below 5% is when you’re paying with cash (although companies who offer sellers cash for their home will typically offer 65% below market price).”

Publisher: HomeLight
Article: Is It Too Low? What Is Reasonable to Offer Below Asking Price
Link: https://tinyurl.com/2jp6kbmh

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