Mortgage Rates Jump on Recent Economic News
Mortgage rates increased 20 basis points last week according to the Freddie Mac Primary Mortgage Market Survey released October 10th. Following the release of a stronger-than-expected September jobs report, the 30-year fixed rate mortgage saw the largest one-week increase since April. However, the rise in rates is largely due to shifts in expectations and not the underlying economy, which has been strong for most of the year. Although higher rates make affordability more challenging, it shows the economic strength that should continue to support the recovery of the housing market.
Mortgage applications decreased 5.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 4, 2024. “In the wake of stronger economic data last week, including the September jobs report, mortgage rates moved higher, with the 30-year fixed rate rising to the highest point since August,” said Mike Fratantoni, MBA’s SVP and Chief Economist. Added Fratantoni, “As we have highlighted before, the decision to buy a home is impacted by many factors, not just the level of mortgage rates. The largest constraint for many prospective homebuyers over the past year had been the lack of inventory. Now, there are more homes available in many markets across the country, and with mortgage rates still low compared to recent history, at least some potential homebuyers are moving ahead.”
The pace of price increases over the past year was higher than forecast in September. The consumer price index, a broad gauge measuring the costs of goods and services across the U.S. economy, increased a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 2.4%. Excluding food and energy, core prices increased 0.3% on the month, putting the annual rate at 3.3%. “The overall trend is what’s important, not the day to day fluctuations,” Chicago Fed President Austan Goolsbee said in an interview following the release. “The overall trend over 12, 18 months is clearly that inflation has come down a lot, and the job market has cooled to a level which is around where we think full employment is.”
The number of Americans filing for unemployment benefits last week jumped to its highest level in a year, which analysts are saying is more likely a result of Hurricane Helene and the Boeing machinist strike than a broader softening in the labor market. The Labor Department reported Thursday that applications for jobless claims jumped by 33,000 to 258,000 for the week of October 3rd. “Claims will likely continue to be elevated in states affected by Helene and Hurricane Milton as well as the Boeing strike until it is resolved,” said Nancy Vanden Houten, lead U.S. economist of Oxford Economics. “We think, though, that the Fed will view these impacts as temporary and still expect it to lower rates by (25 basis points) at the November meeting.”
