Rates Decrease Slightly on Signs of Weaker Economic News
After a small upwards movement last week, mortgage rates are back down by four basis points given incoming data showing slower growth according to the Freddie Mac Primary Mortgage Market Survey released June 6th. Rates are just shy of seven percent, and Freddie Mac expects them to modestly decline over the remainder of 2024. If a potential buyer is looking to buy a home this year, waiting for lower rates may result in small savings, but shopping around for the best rate remains tremendously beneficial.
Mortgage applications decreased 5.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending May 31, 2024. “Mortgage rates moved slightly higher last week, with the 30-year conforming rate reaching its highest level since early May, despite incoming data indicating somewhat slower economic growth,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “After adjusting for the Memorial Day holiday, both purchase and refinance application volumes were down.”
The number of Americans filing new claims for unemployment benefits increased last week and unit labor costs rose by less than previously thought in the first quarter, indicating the labor market is cooling but not enough to allay the Federal Reserve’s hesitance to begin cutting interest rates. Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 229,000 for the week ended June 1, the Labor Department said on Thursday. The continuing claims, tracking those who collect benefits beyond the first week, increased 2,000 to a seasonally adjusted 1.792 million during the week. “The level remains in a range that suggests the labor market remains tight,” said Thomas Simons, U.S. economist at Jefferies. “Continuing claims are still very low by any historical standard, and we still see the data as supporting the notion that people who lose a job are able to find a new one with relative ease.”
The April reading of the Federal Reserve’s preferred inflation measure, released by the Bureau of Economic Analysis, confirmed a plateauing in the rate of price growth so far in 2024. The personal-consumption expenditures price index rose by 0.3% month over month and 2.7% year over year in April. The core index rose by 0.2% month over month and 2.8% year over year. The monthly number was slightly lower than forecasts of 0.3%, while the annual number matched expectations. The April reading should keep the central bank on hold with interest rates for the time being. But it doesn’t make the situation look any worse and represents slow progress toward the Fed’s goals.
