Mortgage Rates This Week – October 10, 2024

Mortgage rates continue to rise after the Fed rate cut a couple of weeks ago. Unfortunately, for those who passed on a great refinance opportunity expecting rates to continue to move lower, it’s a tough reminder that predicting the direction of rates is never a sure bet. Even with the recent move up, mortgage rates are still around the lowest levels we’ve seen in the past two years, allowing some who bought when rates were high to refinance and save a significant amount of money. The 30-year fixed rate currently sits at 5.625%, 5.866% APR with points, and 6.375%, 6.410% APR with 0 points for borrowers with excellent credit and 25% down on a Single-Family Primary Residence.

The recent move higher was triggered by last week’s Bureau of Labor Statistics (BLS) Jobs Report. The report showed 254k jobs created last month, much higher than the 140k jobs that were expected. Unfortunately for rates, the report was strong across the board as the unemployment rate fell from 4.2% to 4.1%, and average hourly earnings rose 0.4% for the month. Normally, you can poke holes in the data to spin any narrative you want; however, in this situation, the only counterargument to this being a really strong report is how inaccurate the BLS has been over the past year, vastly overestimating job growth only to subsequently have the numbers revised lower. This report brings back memories of last September’s blowout jobs report, which caused rates to eventually reach as high as 8%. Hopefully, we won’t experience a repeat of last year this fall and winter.

As a reminder, in August, the BLS released its benchmark revisions for job data between March 2023 and March 2024. The revisions showed that the BLS overestimated job creation by 818,000 jobs, which cut 30% of job growth during that time. This was after initial revisions reduced the original job numbers by over 300k. The BLS report for August yet again showed negative revisions to the previous two months, with June’s report lowered by 25k and May’s number by another 61k. May’s original report estimated that 206k jobs were created. Unfortunately, for rates, the revisions to old data don’t do much to improve things, as the markets now are focused on forward-looking data. Unfortunately, for mortgage rates, the revisions to old data don’t do a lot to improve things as the markets now are focused on forward-looking data.

The September Consumer Price Index (CPI) showed inflation rising 0.2% for the month, and year-over-year inflation decreased from 2.5% to 2.4%, both higher than market expectations. The core reading, which removes volatile food and energy costs, increased 0.3% in September and fell to 3.1% annually, both of which were also higher than expected. Shelter costs and motor vehicle insurance continue to keep inflation elevated, although this month, other categories also contributed, including airline fares and apparel. Tomorrow, we have the Producer Price Index (PPI), and while PPI tends to impact rates less than CPI and PCE, it does give us a forward-looking indicator of future consumer inflation.

Helping limit the negative impact of the CPI report was Initial Jobless Claims, which spiked higher by 33k this week to 258k, the highest level since June 2023. While this report could indicate future employment weakness, it is only one week and not a trend we’ve been seeing. Additionally, Hurricane Helene may have had an impact on this report.

The Fed’s favorite measure of inflation (PCE), Personal Consumption Expenditures, showed headline inflation rose just 0.1% in August, with year-over-year inflation slowing from 2.5% to 2.2%. The core rate, which excludes volatile food and energy costs, also rose 0.1%, and annual core inflation was up 2.7%. While inflation hasn’t reached the Fed’s target of 2%, it continues to trend lower and could reach 2% in the first half of 2025.

In September, for the first time in several years, the Fed cut rates by .50% to start their rate-cutting cycle. Markets were uncertain whether the Fed would lower rates by .25% or .50%. Following the rate decision, Fed Chair Powell indicated they wanted to front load rate cuts and indicated that he expects future rate cuts to be .25%. The summary of Economic Projections showed the Fed forecasting .50% additional cuts this year and another 1.0% next year. Reaction in the rate markets was minimal as nothing in the policy statement or Powells press conference surprised the markets. Stocks, on the other hand, have shot higher banking on the Fed’s ability to help avoid a recession with a more lenient monetary policy.

For those expecting mortgage rates to drop in step with the Fed Funds rate, we were once again reminded that the Fed does not directly control long-term rates, including mortgage rates. While we didn’t see a drop this week, mortgage rates dropped dramatically over the past year, from a high of 8% to just under 6% before the Fed rate cut. For rates to move lower going forward, we must see continued economic weakness, specifically in the jobs market, and more progress on cooling inflation.

Purchase activity has remained strong, as we’ve continued to see solid demand even as peak buying season has passed. Still, many clients trying to purchase are finding less competition than earlier in the spring as home inventory increases. Clients who choose to get a fully underwritten preapproval are seeing more success getting offers accepted on high-demand homes.

To find the lowest possible rate, compare different lenders and collaborate 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
10/21/2024

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

Washington State mortgage rates

Mortgage rates In Oregon

Mortgage rates in Idaho

Mortgage Rates for Colorado

California Mortgage Rates

National Average Mortgage Rates:

(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) September = -0.2% – Annual = 2.4%  

Producer Price Index (PPI) August = 0.2% – Annual = 1.7%

Personal Consumption Expenditures (PCE) August = 0.1% – Annual = 2.2% 

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.

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.

Instant Mortgage Rate Quote

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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