Mortgage Rates This Week – February 21, 2024

Mortgage rates are down slightly this week, with little in the way of major economic data as the bond market tries to recover from last week’s hotter-than-expected inflation reports.  The 30-year fixed rate currently sits at 6.000%, 6.270% APR with points, and 6.875%, 6.913% APR with 0 points for borrowers with excellent credit and 25% down on a Single Family Primary Residence.

Although not a big market mover, the Leading Economic Index released by The Conference Board came out today and showed January LEI fell 0.4%, which is the 22nd consecutive month of declines. This index takes a broad look at the economy and continues to point to a future slowdown in Q2 and Q3. Without a slowing economy, we will continue to see increased pressure on inflation, and mortgage rates will likely continue to rise, possibly back to the highs we saw last fall. While no one wants to see a recession, an overheating economy poses a much bigger risk long term, which is why the Fed, for now, is taking a wait-and-see approach to rate cuts.

Capping off a bad week for mortgage rates on Friday was the Producer Price Index (PPI), which measures producer inflation rising 0.3% in January, higher than the 0.1% expected by the markets. Year-over-year inflation declined from 1.0% to 0.9% also worse than expectations of 0.6%. The core rate rose 0.5%, significantly higher than the expected 0.1% increase.

Also causing mortgage rates to move higher was the January Consumer Price Index (CPI) report showed overall inflation rising 0.3% for the month and dropping from 3.4% to 3.1% year over year. Both numbers were hotter than the markets were expecting. Additionally, the more closely watched core rate, which removes volatile food and energy costs, increased by 0.4% in January, and the year-over-year rate remained flat at 3.9%, both of which were worse than the market expected. The bond markets reacted immediately, pushing rates up .25% shortly after the report’s release. Expectations of a Fed rate cut have now been pushed into summer as worries that inflation could heat up again increase.

Recent rental data from the CoreLogic Rental report showed rents are up 2.8% year over year in December, down significantly from the 7.5% increase reported this time one year ago. While this current data shows shelter inflation cooling significantly, the CPI report from last week showed shelter costs rising 6.0% because of the lag in how CPI shelter costs are reported. This was the primary reason overall inflation was hotter than expected, and many experts are still expecting shelter costs reported in the inflation data will cool in the coming months and get more in line with recent rental data.

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Helping limit the damage from last week’s inflation data was Retail Sales, which declined much more than expected, down -0.8% in January vs. the expected decline of 0.1%.  Core Retail Sales also missed down 0.4% compared to estimates of a 0.2% increase. Outside of COVID, Retail Sales grew at the slowest annual pace since 2019. As the US consumer continues to rack up record levels of debt, many are looking for signs the consumer is finally tapped out. This report is one sign consumer spending may slow and is a trend to watch in the coming months.

Earlier this month, the Bureau of Labor Statistics (BLS) report showed there were 353,000 jobs created in January, almost double the 180k the markets expected. Additionally there were 126,000 jobs added in revisions to the previous two months, prompting rates to shoot higher immediately following the news. While the headline report clearly shows a robust jobs market and strength in the economy, it’s important to understand that the headline number is not the raw data. In reality, the raw job figure showed 2.635M jobs lost with seasonal adjustments by the BLS adding 2.988M jobs back, which resulted in the 353k jobs gained. January is always a big adjustment month following the holiday season, and in recent years, the January number has been better than the reports that followed, likely due to going too far with the seasonal adjustments.

Another piece of the jobs report that caused rates to move higher was hourly earnings rising from 4.4% to 4.5%, and wage-pressured inflation rose 0.6%. If this data is accurate, it is a step back in the fight to bring down inflation; however, the BLS data contradicts the ADP report, which came out Wednesday and showed declines in wage pressure. Additionally, ADP uses a much larger sample size to get their data; many feel their numbers are more accurate than those from the BLS. Helping limit the damage was the average weekly hours worked, declining from 34.3 to 34.1, the lowest level since 2010 outside of the pandemic. The drop in hours worked more than offsets the increase in wages as far as the impact on the overall economy.

Two days prior to the BLS report came a disappointing ADP Employment Report, which showed 107,000 jobs created during the month, below the 150k the market was expecting. Annual pay for employees staying in their current jobs increased 5.2%, down from 5.4% from the previous month. Job changers saw an average increase in pay of 7.2%, which was also down from 8.0% the previous month. While still elevated, wage pressure has moved lower in each of the past 19 months. While the ADP report impacts the markets, Friday’s BLS jobs report is usually a bigger market mover and has consistently shown more jobs added when compared to ADP recently. Also helping rates was the Employment Cost Index, which the Fed closely watches. The report showed wage-pressured inflation was up 0.9% in Q4 vs. Q3 vs. a 1% increase that was expected.

Late last month, Personal Consumption Expenditures (PCE) came in slightly below expectations, with headline inflation rising 0.17% for December. The year-over-year reading stayed flat at 2.6%. The core rate removing food and energy prices rose 0.17%, also below expectations, and the annual rate fell to 2.9%, down from 3.2%. If you annualize the last 6 months of core PCE readings, which Chairman Powell said the Fed looks at, the rate sits at 1.85%, which is below the Fed’s inflation target of 2.0%.

MBS Highway, a paid service we use to monitor and advise on mortgage rates, released their 2024 forecast for mortgage rates and home appreciation. In the forecast, they predicted there was a strong possibility that mortgage rates would move to around 5.5% this year and could continue to move lower in 2025 and 2026. While predicting rates is incredibly difficult and subject to variability due to unforeseen factors, MBS Highway’s track record has proven to be more accurate than most. Additionally, they expect housing appreciation to rise again this year, although at a more modest pace of around 5%. Last year, they predicted appreciation would come in around 6.8%, which is right where appreciation ended up for 2023.

To embark on your quest for the lowest possible rate, consider comparing different lenders and collaborating with a company that offers transparent mortgage rates and costs online. Experienced Mortgage Advisors and Loan Officers can guide you through the current market conditions and chart the best course forward.

Current Mortgage Rates This Week for WA, OR, ID, CA, and CO From Sammamish Mortgage
02/22/2024

**Conforming assumptions – $800k Purchase Price, 25% Down, 800+ Credit
**Jumbo assumptions – $1.5MM Purchase Price, 25% Down, 800+ Credit

Washington State mortgage rates

Loan Programs Rate APR
Conforming 30-year fixed 6.125% 6.365%
Conforming 15-year fixed 5.500% 5.897%
Conforming 7/1 ARM 5.875% 7.196%
Jumbo 30 year fixed 6.375% 6.629%

Mortgage rates In Oregon

Loan Programs Rate APR
Conforming 30-year fixed 6.000% 6.268%
Conforming 15-year fixed 5.375% 5.794%
Conforming 7/1 ARM 5.750% 7.147%
Jumbo 30 year fixed 6.375% 6.629%

Mortgage rates in Idaho

Loan Programs Rate APR
Conforming 30-year fixed 6.125% 6.349%
Conforming 15-year fixed 5.375% 5.797%
Conforming 7/1 ARM 5.750% 7.147%
Jumbo 30 year fixed 6.375% 6.629%

Mortgage Rates for Colorado

Loan Programs Rate APR
Conforming 30-year fixed 6.125% 6.349%
Conforming 15-year fixed 5.375% 5.808%
Conforming 7/1 ARM 5.875% 7.186%
Jumbo 30 year fixed 6.375% 6.629%

California Mortgage Rates

Loan Programs Rate APR
Conforming 30-year fixed 6.125% 6.354%
Conforming 15-year fixed 5.500% 5.885%
Conforming 7/1 ARM 5.875% 7.188%
Jumbo 30 year fixed 6.375% 6.629%

National Average Mortgage Rates:

Loan ProgramsRate
30-year fixed mortgage rate6.66%
20-year fixed mortgage rate6.39%
15-year fixed mortgage rate5.92%
10-year fixed mortgage rate6.02%
30-year jumbo mortgage rate6.94%
5/1 adjustable mortgage rate6.67%

(State-specific rates sourced from Sammamish Mortgage – National Average rates sourced from Zillow)

Consumer Price Index, Consumer Sentiment & Inflation

Without a doubt, the biggest driver of interest rates is inflation. With that in mind, we continue to focus on inflation data and expectations going forward to gauge what we can expect to see interest rates in the coming months. Current inflation is running well above the Fed’s annual target of 2%, pushing the Fed’s hand to raise short-term rates to slow things down. While current numbers remain elevated, we expect a significant reduction in the inflation readings in the coming months as various factors moderate the pace of inflation.

Consumer Price Index (CPI) January = 0.3% – Annual = 3.1%  

Producer Price Index (PPI) January = 0.3% – Annual = 0.9%

Personal Consumption Expenditures (PCE) December= 0.17% – Annual = 2.6% 

Overall, it is difficult to predict what will happen with mortgage rates in the near term. With global economic turmoil, banking issues, inflation, and thus far a far more resilient economy than many expected, trying to predict rates from one day to the next to time a rate lock is almost impossible or at least requires luck. However, looking at a longer time horizon, it’s much easier to see that there is an excellent chance we could see rates move lower from current levels, providing an opportunity for recent and existing buyers to potentially refinance in the future.

See Current Rates

What the Fed rate hike means for borrowers, savers, and investors

When the Federal Reserve raises interest rates, it affects various aspects of the economy, including the housing market, savings, and investment.

For potential homebuyers, a Fed rate hike typically leads to an increase in mortgage rates in the early stages of a tightening cycle; however, if the market thinks the Fed rate increases will hurt the economy and cause inflation to decrease, mortgage rates can improve when the Fed raises the Fed Funds Rate. It’s important to note that the Fed does not control mortgage rates. Fed rate increases do directly impact credit card rates, car loans, and commercial loans, which are shorter in duration than a typical 30-year fixed mortgage.

For savers, a Fed rate hike may lead to higher returns on savings accounts and certificates of deposit (CDs). In addition, banks and other financial institutions may increase the interest rates they pay to savers to remain competitive, which can benefit savers looking to earn more on their savings.

A Fed rate hike may impact the stock and bond markets for investors. Typically, when interest rates rise, the value of stocks and bonds can fall as investors may shift their money to fixed-income investments with higher returns. However, the impact of a rate hike on the markets can be complex and depends on various factors, such as the overall state of the economy, inflation expectations, and global events.

FOMC Meeting DateRate Change (bps)Federal Funds Rate
July 26, 2023+255.25% to 5.50%
May 03, 2023+255.00% to 5.25%
March 22, 2023+254.75% to 5.0%
February 2, 2023+254.50% to 4.75%
December 14, 2022+505.0% to 5.25%
November 2, 2022+754.5% to 4.75%
October 12, 2022+753.75% to 4.00%
Sept 21, 2022+753.00% to 3.25%
July 27, 2022+752.25% to 2.5%
June 16, 2022+751.5% to 1.75%
May 5, 2022+500.75% to 1.00%
March 17, 2022+250.25% to 0.50%

Loan Limits Increased For 2024

Loan limits have increased for 2024. Each county in every state has its loan limit. That said, the new standard conforming loan limit is $766,550, and high balance limits in select high-priced areas can go up as high as $1,149,825 for 1-unit properties in 2024.

Visit our 2024 conforming loan limit pages for Washington State, Oregon, Idaho, California,, and Colorado.

For FHA loan limits for 2024, visit our pages for Washington State, Idaho, Colorado, California and Oregon.

Check out our mortgage loan limit tool for conventional, FHA, and VA loans.

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Ready to Apply For a Mortgage?

Do you have questions about rates this week and home loans? Or are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, Colorado & California. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Our programs include the Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Contact us today with any questions you have about mortgages.

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