Mortgage Rates This Week – May 1, 2024

Mortgage rates are down slightly this morning and holding steady following the Fed’s announcement that it will keep rates at their current levels. The Fed also announced a reduction of their treasury balance runoff from $60 Billion per month to $25 Billion per month, which was $5 Billion better than expected and could help lower long-term rates in the coming months. No change was made to the cap on mortgage-backed securities, which is what the market expected. While mortgage rates hover around their highest levels of the year, we are still .5% below last October’s highs. The 30-year fixed rate currently sits at 6.500%, 6.751% APR with points, and 7.125%, 7.164% APR with 0 points for borrowers with excellent credit and 25% down on a Single-Family Primary Residence.

This week is jobs week, and today, we saw the April ADP Employment report, which came in slightly above expectations. 192,000 jobs were created during the month, above estimates of 183,000. Additionally, March was revised higher by 24,000 jobs. Friday, we will get the BLS jobs report, which, other than the Fed and the CPI and PCE inflation reports, has the biggest monthly impact on mortgage rates. Recently, the BLS report has shown a much higher rate of job creation than the ADP report. With the ADP report coming in stronger than expected today, we could once again see mortgage rates rise on Friday if the BLS report follows suit and comes in stronger than expected.

The ISM Manufacturing index was also released today. The index fell in April from 50.3 to 49.2, which is in contraction. While this is a positive for mortgage rates, looking deeper in the report, we saw that prices increased from 55.8 to 60.9, the highest level since the summer of 2022 and another indicator of higher inflation.

PCE (Personal Consumption Expenditures), the Fed’s favorite measure of inflation, showed that inflation rose by 0.3% in March, which matched expectations. The year-over-year reading increased from 2.5% to 2.7%. The core rate removing food and energy prices also rose by 0.3%, which was in line with expectations, and the annual rate stayed flat at 2.8%. This data reinforces the fact that cooling inflation has stalled. Without declining inflation, if we continue to see strength in employment, rates will have no reason to come down and will see continued pressure higher.

Consumers continue to defy expectations of curbing spending, as reflected by a stronger-than-expected retail sales report, which rose 0.7% in March compared to the 0.3% the markets anticipated. Additionally, February’s report was revised from 0.6% to 0.9%. Many had been pointing to slowing consumer demand as a reason the economy and inflation would cool this year; however, this is the second month in a row we have seen higher inflation from what we saw late last year and in January, which has forced analysts to readjust their rate forecasts. With inflation, employment, and consumer data all outpacing expectations, there is little reason for interest rates to come down as many had predicted and hoped.

The PPI (Producer Price Index) measures wholesale inflation and is an early indicator of future consumer inflation data. The report showed year-over-year prices rising to 2.1% from 1.6% and being up 0.2% in March. Both were slightly lower than expected, which helped minimize the damage from the much hotter-than-expected CPI data.

Before the PPI report rates jumped on a stronger-than-expected CPI (Consumer Price Index) report, which showed that progress on inflation has stalled. Hopes that the data from the past couple of months was a temporary speed bump to lower inflation were dashed with today’s report, as overall inflation rose 0.4% for the month and increased from 3.2% to 3.5% 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, also increased by 0.4% in March, and the year-over-year rate stayed flat at 3.8%, both of which were worse than the market expected. The bond markets reacted immediately, pushing mortgage rates higher by .25% shortly after the report’s release. The biggest factor in the high inflation data was shelter costs, which comprised 45% of the core CPI reading and continues to defy expectations by rising 0.4% in March. The shelter numbers we’re seeing in both the CPI and PCE inflation data over the past year have been significantly higher than other reports, including those from CoreLogic and the Apartment List Index. Many, including the Fed, have pointed to expected declines in shelter costs as a catalyst for the Fed to start cutting rates; however, so far, shelter costs have remained stubbornly high.

Spring buying season is underway, and we are seeing increased inventory and buyer demand. Many clients trying to purchase are seeing a lot of competition, and multiple offers are the norm. Clients who choose to get a fully underwritten preapproval are seeing more success in 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
05/08/2024

**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) March = 0.4% – Annual = 3.5%  

Producer Price Index (PPI) March = 0.2% – Annual = 2.1%

Personal Consumption Expenditures (PCE) March = 0.3% – Annual = 2.7% 

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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