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Mortgage rates are down in response to slowing inflation and renewed hopes that the Federal Reserve could cut the federal funds rate multiple times this year. 

After spending most of the month in the upper 6% range, 30-year mortgage rates have finally dropped back down below 6.5%, according to Zillow data.

Last week, the Bureau of Labor Statistics reported that the Consumer Price Index rose 3.0% year over year in June. This was a significant cooldown from the previous month and lower than what many forecasters were expecting. As a result, mortgage rates decreased.

As long as inflation continues to slow, mortgage rates should ease throughout the remainder of 2024, improving affordability for hopeful homebuyers. If you’re in the process of shopping for a home right now, you can limit the impact of today’s still-high rates by getting quotes from at least three different mortgage lenders to be sure you’re getting the best deal.

Current Mortgage Rates

Mortgage type Average rate today
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Current Refinance Rates

Mortgage type Average rate today
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mortgage rates on Zillow

Real Estate on Zillow

Mortgage Calculator

Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.

Mortgage Calculator

$1,161
Your estimated monthly payment

Total paid$418,177
Principal paid$275,520
Interest paid$42,657
  • Paying a 25% higher down payment would save you $8,916.08 on interest charges
  • Lowering the interest rate by 1% would save you $51,562.03
  • Paying an additional $500 each month would reduce the loan length by 146 months

Click “More details” for tips on how to save money on your mortgage in the long run.

Mortgage Rates for Buying a Home

30-Year Fixed Mortgage Rates Fall (-0.47%)

The current average 30-year fixed mortgage rate is 6.21%, down 47 basis points from where it was this time last week, according to Zillow data. This rate is also down compared to a month ago, when it was 6.62%. 

At 6.21%, you’ll pay $613 monthly toward principal and interest for every $100,000 you borrow.

The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.

20-Year Fixed Mortgage Rates Inch Decrease (-0.40%)

The average 20-year fixed mortgage rate is 40 basis points down from where it was last week, and is sitting at 6.03%. This time last month, the rate was 6.26%.

With a 6.03% rate on a 20-year term, your monthly payment will be $718 toward principal and interest for every $100,000 borrowed.

A 20-year term isn’t as common as a 30-year or 15-year term, but plenty of mortgage lenders still offer this option.

15-Year Fixed Mortgage Rates Go Down (-0.41%)

The average 15-year mortgage rate is 5.66%, 41 basis points lower than last week. It’s down compared to this time last month, when it was 6.05%.

With a 5.66% rate on a 15-year term, you’ll pay $826 each month toward principal and interest for every $100,000 borrowed.

If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you’ll have a higher monthly payment than you would with a longer term.

7/1 ARM Rates Drop (-0.30%)

The 7/1 adjustable mortgage rate is down 30 basis points from a week ago at 6.39%. It’s also down compared to a month ago, when it was at 6.97%. 

At 6.39%, your monthly payment would be $625 toward principal and interest for every $100,000 borrowed — but only for the first seven years. After that, your payment would increase or decrease annually depending on the new rate.

5/1 ARM Rates Lower This Week (-0.37%)

The average 5/1 ARM rate is 6.26%, a 37-basis-point decrease from last week. It’s down compared to where it was a month ago, when it was 6.79%.

Here’s how a 6.26% rate would affect you for the first five years: You’d pay $616 per month toward principal and interest for every $100,000 you borrow.

30-Year FHA Rates Fall (-0.45)

The average 30-year FHA interest rate is 5.54% today, down 45 basis points from the week before. This rate was 6.10% a month ago.

At 5.54%, you would pay $570 monthly toward principal and interest for every $100,000 borrowed.

FHA mortgages are good choices if you don’t qualify for a conforming mortgage. You’ll need a 3.5% down payment and 580 credit score to qualify.

30-Year VA Rates Tick Down (-0.27%)

The current VA mortgage rate is 5.58%, 27 basis points lower than this time last week. This rate was 6.04% a month ago.

With a 5.58% rate, your monthly payment would be $573 toward principal and interest for every $100,000 you borrow.

Mortgage Refinance Rates

30-Year Fixed Refinance Rates Decrease (-0.39%)

The average 30-year refinance rate is 7.45%, 39 basis points down from last week. It’s down compared to a month ago, when it was 7.79%.

Here’s how a 7.45% rate would affect your monthly payments: You’d pay $696 toward principal and interest for every $100,000 borrowed.

Refinancing into a 30-year term can land you lower monthly payments, but you’ll ultimately pay more by refinancing into a longer term.

20-Year Fixed Refinance Rates Drop a Bit (-0.17%)

The current 20-year fixed refinance rate is 6.62%, which is down 17 basis points compared to a week ago. This rate was 7.11% this time last month.

A 7.53% rate on a 20-year term will result in a $807 monthly payment toward principal and interest for every $100,000 you borrow.

15-Year Fixed Refinance Rates Tick Up (+0.23%)

The average 15-year fixed refinance rate is 6.15%, which is 23 basis points higher compared to last week. It’s down slightly compared to this time a month ago, when it was at 6.28%.

A 6.15% rate on a 15-year term means you’ll pay $852 each month toward principal and interest for every $100,000 borrowed.

Refinancing into a 15-year term can save you money in the long run, because you’ll get a lower rate and pay off your mortgage faster than you would with a 30-year term. But it could result in higher monthly payments.

7/1 ARM Refinance Rates Fall (-0.53%)

The average 7/1 ARM refinance rate is 6.43%, down 53 basis points from where it was last week. It’s also down from a month ago, when it was 6.83%.

Refinancing into a 7/1 ARM with a 6.43% rate means your monthly payment toward principal and interest will be $627 for every $100,000 you borrow. This will be the payment for the first seven years, then your rate will change annually unless you refinance again.

5/1 ARM Refinance Rates Go Down (-0.13%)

The 5/1 ARM refinance rate is 6.25%, which is 13 basis points lower than it was this time last week. It’s down compared to this time last month, when it was 6.50%.

A 6.25% rate will result in a monthly payment of $616 toward principal and interest for every $100,000 borrowed. You’ll pay this amount for the first five years of your new mortgage.

30-Year FHA Refinance Rates Drop Slightly (-0.16)

The 30-year FHA refinance rate is 5.63%, which is down 16 basis points from this time last week. It was 5.79% a month ago.

A 5.63% refinance rate would lead to a $576 monthly payment toward the principal and interest per $100,000 borrowed.

30-Year VA Refinance Rates Inch Down (-0.06)

The average 30-year VA refinance rate is 5.85%, which is down six basis points compared to where it was was last week. This rate was 5.88% a month ago.

At 5.85%, your new monthly payment would be $590 toward principal and interest for every $100,000 you borrow.

Are Mortgage Rates Going Down?

Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022. Mortgage rates also rose dramatically in 2023, though they started trending back down toward the end of the year. Though rates have been somewhat elevated recently, they should go down by the end of 2024. 

For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease further. Check out some of our best HELOC lenders to start your search for the right loan for you.

A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.

Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans. 

Molly Grace

Mortgage Reporter

Source: businessinsider.com

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Enjoy complimentary access to top ideas and insights — selected by our editors.

In recent years, the U.S. has hit record inflation rates due to factors as wide ranging as labor shortages and the war in Ukraine, but the degree to which prices have risen vary across the country.

WalletHub recently determined how inflation is impacting different communities in the U.S. by comparing 23 major MSAs (Metropolitan Statistical Areas) across two key metrics related to the Consumer Price Index, using the factors to determine a total score out of 100 for each metro area.

“Rising housing and natural gas prices accounted for 70% of the 3.4% increase in the latest monthly CPI report,” David Skidmore, professor of political science at Drake University, said in a WalletHub release. “Older homeowners who have mortgages locked in at low fixed rates are staying put, with the result that fewer homes are available for younger homebuyers to enter the market. This, along with sluggish new home construction, has pushed up home prices. Rents have risen to match.”

Read more: Inflation, housing costs spook consumers 

The metro area on this list with the biggest inflation problem is Detroit-Warren-Dearborn, Michigan, which has the highest CPI change over two months. Other top metro areas include Dallas-Fort Worth-Arlington, Texas, and Urban Honolulu, Hawaii. Honolulu has the highest CPI change over the year. 

Read more about the cities with the biggest inflation problems.

Source: nationalmortgagenews.com

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HMDA Data, Correspondent and Wholesale Products; Inflation and Rate Updates

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HMDA Data, Correspondent and Wholesale Products; Inflation and Rate Updates

By:
Rob Chrisman

Fri, Jul 12 2024, 11:37 AM

“I’m sorry, but you can’t always be ‘experiencing a higher volume of calls than average.’ That’s not how averages work.” The “average” person has a student loan, or a car loan, or credit card debt, or all three. Throw in mortgage interest rates around 7 percent, homeowner’s insurance of possibly thousands of dollars, utilities, property taxes, maintenance, mortgage insurance…you get the picture. Home affordability has deteriorated due to all those reasons, not the least of which is mortgage rates, sidelining many prospective buyers from entering the housing market. But even with tight credit standards and high interest rates continuing to constrain lending growth, most homeowners (67 percent) feel that purchasing a home is still attainable, especially as consumers become less downbeat about the effect of inflation on their household finances. Expert advice can help ease the stress of buying: about 40 percent of homeowners are unfamiliar with mortgage affordability/loan programs. Certainly that’s something that good originators can help with. (Today’s podcast is found here and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender, uniting the people, systems, and stages of the mortgage process. Hear an interview with Loan Atlas’ Tim Braheem on the best formal education platform for individuals in the mortgage space, covering sales, time management, customer service systems, marketing, leadership, and much more.)

Lender and Broker Software, Services, and Products

Empower self-employed borrowers by maximizing Bank Statement loans and unveiling market opportunities! With this program your borrowers can use up to 85 percent of deposits from business bank statements, without a CPA letter, helping them to qualify with no hassle! No tax returns or 4506C required! Why choose Kind for non-QM? “Our programs are equipped to meet complex finances with flexible terms to help a wider range of borrowers who fall outside conventional lending criteria. We understand that every client is unique and with the dedicated support of our seasoned mortgage professionals and streamlined broker technology, we ensure a smooth and simple process in every aspect of your deal.” Ready to learn more about Kind’s Bank Statement Loan program and how it can help your borrowers who don’t meet the requirements for standard mortgages? Connect with your Kind AE! If you’re not yet a partner with Kind, visit here.

Lenders are fighting to keep their businesses afloat. Advantage Credit gets it. Advantage truly values and appreciates the mortgage professionals out there who are grinding away to make it through this storm. Advantage simply wants everyone to know that they are here to listen and to help in any way that they can. Advantage offers a Services Review (for FREE) to see if they can identify ways to be more efficient and even save some money. It isn’t a silver bullet but it’s what they can do. If nothing else, they want you to know that they are here to listen if anyone just needs an ear to bend and commiserate with. Just fill out this form and let them know a good time to reach out to talk. “We are all in this together and are hopeful for an eventual positive outcome for everyone.”

Symmetry is extremely grateful for our partners! Service, Speed, & Simplicity. And now with better Piggyback HELOC Pricing & Comp options. Margins now as low as Prime +0 percent. Now offering 1 percent borrower paid comp option on their Piggybacks. 1.5 percent borrower paid comp still available on stand-alone HELOCs. Reach out to your Symmetry AE today.

OCMBC, Inc. acknowledges the dramatized lawsuit filed by Home Mortgage Alliance Corporation (HMAC) and firmly denies all allegations. The lawsuit, which lacks merit, is an attempt to engender fear and distract from the true motivations behind it. The FHFA order mandates an indefinite cessation of business relationships with various individuals that have been suspended by FHFA. (FHFA Document). OCMBC maintains that the transitions of employees were made independently and lawfully. All procedures are robustly followed to ensure compliance with legal and regulatory requirements. OCMBC’s strong industry reputation is evident, as it remains a top wholesale lender and a leading NonQM originator in the nation. This lawsuit is seen as a groundless attempt by a less reputable entity to extract financial gain. OCMBC is committed to defending itself vigorously and maintaining its stellar reputation. For more information and full press release, please visit www.OCMBC.com.

FHFA and Vantage Score 4.0

The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) are making historical VantageScore® 4.0 credit scores available to approved users to support the transition to updated credit score and credit report requirements. The historical credit scores for each Enterprise are associated with single-family loans purchased by that Enterprise from April 2013 through March 2023. This comprehensive release reflects the period for which trended consumer credit data is reliably available across the three nationwide consumer reporting agencies. These scores will provide market participants the ability to better analyze and understand the new credit score models that have been validated and approved for use by the Enterprises. The historical credit scores are available for download at the Enterprises’ respective websites. “The release of historical credit scores on tens of millions of loans provides an extensive resource to help market participants prepare for this transition,” said Director Sandra L. Thompson. “The use of these modernized credit score models will enhance risk management while furthering sustainable access to credit for consumers.” In October 2022, FHFA announced the validation and approval of modernized credit score models for use by the Enterprises. At the same time, FHFA announced that the Enterprises would permit lenders to deliver loans with either tri-merge credit reporting, in which credit reports from each of the three nationwide consumer reporting agencies are used, or bi-merge credit reporting, in which credit reports from two of the nationwide consumer reporting agencies are used.

Mortgage QC Trends and Industry Insights

Don’t miss the latest QC webinar presented by ACES Quality Management’s President, Phillip McCall, and EVP, Nick Volpe on July 17th. In this highly anticipated webinar, these industry experts will cover an in-depth analysis of ACES’ recent Mortgage QC Industry Trends Report, deep dive into mortgage quality control trend reporting and how it aligns with the current state of the industry; and discuss how to best navigate through the volatile financial landscape. Walk away with a better understanding of what’s to come and how you can best prepare for the future. Register for the webinar.

You tell your borrowers that you’re different than the other guys, but then use the same software as everyone else to manage your borrower portal? Differentiate your borrower experience with LiteSpeed by LenderLogix. A+ borrower experience at a price tag your CFO will appreciate.

As lenders continue their mission of increased efficiencies in the origination process, including shorter closing timelines, inspection-based appraisal waivers should be at the top of their implementation list. Thanks to innovations made across the industry, including programs and solutions put in place by the GSEs, inspection-based appraisal waivers are here to stay. When used accordingly, these can result in massive time savings for lenders. However, one hurdle continues to be some confusion around how they work. To help with this, Class Valuation will be hosting a webinar Tuesday, July 30th, titled “Inspection-Based Appraisal Waivers: Everything You Need to Know.” Expert panelists will provide a clear and actionable guide to understanding the options available to lenders and how to properly work them into your operations. You will learn the benefits of inspection-based appraisal waivers for lenders, when a loan is eligible, the ins and outs of property data collection, and much more. Register here

HMDA Data Released

The Federal Financial Institutions Examination Council published data on 2023 mortgage lending transactions reported under the Home Mortgage Disclosure Act (HMDA) by 5,113 U.S. financial institutions, including banks, savings associations, credit unions, and mortgage companies. The HMDA data are the most comprehensive source of publicly available information on mortgage market activity. The Snapshot National Loan-Level Dataset released contains the national HMDA datasets as of May 1, 2024. Key observations include: For 2023, the number of reporting institutions increased by about 14.6 percent from 4,460 in the previous year to 5,113. The 2023 data include information on 10 million home loan applications, a decrease from the 14.3 million reported in 2022. Among them, 7.7 million were closed-end (e.g., a home mortgage loan) and 2.1 million were open-end (e.g., a home equity line of credit). Another 266,000 records are from financial institutions making use of statutory partial exemptions and did not indicate whether they were closed-end or open-end.

The share of mortgages originated by non-depository, independent mortgage companies accounted for 68.8 percent of first lien, one- to four-family, site-built, owner-occupied home-purchase loans in 2023, up from 60.2 percent in 2022. In terms of borrower race and ethnicity, the share of closed-end home purchase loans for first lien, one- to four-family, site-built, owner-occupied properties made to Black or African American borrowers rose slightly from 8.1 percent in 2022 to 8.2 percent in 2023. The share made to Hispanic-White borrowers increased from 9.1 percent to 9.9 percent, and the share made to Asian borrowers increased slightly from 7.6 percent to 7.7 percent. In 2023, Black or African American and Hispanic-White applicants experienced denial rates for first lien, one- to four-family, site-built, owner-occupied conventional, closed-end home purchase loans of 16.6 percent and 12.0 percent respectively. Denial rates for Asian and non-Hispanic-White applicants were 9.0 percent and 5.8 percent respectively.

Capital Markets

Warning, rate cuts may be coming soon, even if the Fed isn’t quite ready to admit it publicly. A drop in gasoline prices and housing costs led the way for inflation to cool broadly last month to the slowest pace since 2021. Yesterday morning’s CPI report, in which consumer prices declined by 0.1 percent month-over-month, is arguably the most encouraging inflation print that the FOMC has received since it began its fight against inflation nearly two and a half years ago. Excluding food and energy, the core CPI increased by just 0.06 percent (unrounded), the smallest increase since January 2021. Bonds rallied on the reading across the board to lows last seen in March.

With Fed Chair Powell expressing optimism that the uptick in inflation earlier this year was just a speed bump, this reading will likely go a long way toward giving the FOMC the confidence needed to cut rates, likely starting in September (93 percent implied certainty). Traders are pricing in another 25 basis point reduction of the fed funds rate in December. However, some people are skeptical, asking if the U.S. economy needs stimulation. Policymakers will have a chance to signal such moves after meeting later this month, especially with unemployment having risen for three consecutive months. Unemployment, while still low, is steadily moving higher; Job and wage growth are steadily moderating.

After the consumer price index report dominated headlines yesterday, it is producer prices’ turn today. Today’s economic calendar kicked off with June PPI coming in higher than expected (+0.2 percent month-over-month) and Core PPI (up 0.4 percent month-over-month) with upward revisions to previous months. The only other data point today is Preliminary July University of Michigan Consumer Sentiment, due out later this morning. Bank earnings also get under way with JP Morgan, Citigroup and Wells Fargo reporting before the open. We begin Friday with Agency MBS prices and the 10-year yielding 4.22 percent after closing yesterday at 4.19 percent; the 2-year is at 4.51 percent.

Employment

Evergreen Home Loans is excited to announce a leadership transition within its production team. Don Zender, a 30-year company veteran and President of Production for the past three years, has passed the baton to Robert Lipston, effective July 2, 2024. Robert joined Evergreen in 2022, bringing significant growth and a fresh perspective. Don Zender successfully led the team through challenging market conditions, supported by Todd Miles, Joe Moley, and Robert Lipston. Under their leadership, the team thrived, finding opportunities in adversity. Robert Lipston, with his extensive industry experience, is now poised to lead Evergreen’s next growth phase. Don will remain President of Production through 2024, aiding Robert in the transition and continuing to support Evergreen’s values of Integrity, Family, Fun, Growth, and Creativity. In 2025, Don will focus on the Bellevue Washington Region and drive new growth initiatives across the company. If you’re ready to grow with Evergreen, visit Careers.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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For a 30-year fixed-rate mortgage, the average rate you’ll pay is 6.94% today, a decrease of -0.14% over the last week. The average rate for a 15-year fixed mortgage is 6.41%, which is a decrease of -0.13% since last week. For a look at mortgage rate movement, see the chart below.

The Federal Reserve has been postponing interest rate cuts because inflation has been slow to improve. While experts still expect mortgage rates to gradually move lower in the coming months, housing market predictions can always change in response to economic data, geopolitical events and more.

Today’s average mortgage rates


Today’s average mortgage rates on Jul. 15, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.

Mortgage rates are expected to slowly decline in 2024. You can take advantage by comparing loan offers from multiple lenders to get the lowest rate. Start by entering your information below to get a custom quote from one of CNET’s partner lenders.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.

What are the different mortgage types?

Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.

30-year fixed-rate mortgages

The average interest rate for a standard 30-year fixed mortgage is 6.94% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.

15-year fixed-rate mortgages

Today, the average rate for a 15-year, fixed mortgage is 6.41%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 6.59% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.

What’s behind today’s high mortgage rates?

At the start of the pandemic, mortgage rates were near record lows, around 3%. That all changed as inflation began to surge and the Federal Reserve kicked off a series of aggressive interest rate hikes starting in March 2022 to slow the economy, which indirectly drove up mortgage rates.

Now, more than two years later, mortgage rates are still around 7%. Over the last several months, mortgage rates have fluctuated in response to economic data and investors’ expectations as to when the Fed will start to lower rates.

Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.

Will we see lower mortgage rates in 2024?

Most experts predict mortgage rates will fall below 7% in the coming months. However, a sustained downward trend will depend on several factors, including upcoming inflation and labor data.

The Fed hasn’t hiked interest rates in almost a year, but an actual rate cut doesn’t appear imminent. Some experts say the first cut could come as early as July, though it’s more likely we see the Fed lower rates in September or November.

“If the Fed makes any moves later this year, the signal would be sufficient for the mortgage market, and mortgage rates would start falling,” said Selma Hepp, chief economist at CoreLogic. “In that case, we could see the mortgage rates around 6.5% at the year-end.”

One thing is for sure: Homebuyers won’t see lower mortgage overnight, and a return to the 2-3% mortgage rates from just a few years ago is unlikely.

Here’s a look at where some major housing authorities expect average mortgage rates to land.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.

How can I get the lowest mortgage rates?

Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.

  1. Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
  2. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
  3. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
  4. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
  5. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.

Source: cnet.com

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Wells Fargo was supposed to be a major beneficiary of higher interest rates, but depositors seeking more bang for their buck and soft loan demand from business customers combined to to pinch profits in the second quarter.

The bank’s stock price fell 6% in mid-afternoon trading Friday, as investors absorbed the disappointing news about how much interest income the megabank is raking in.

High borrowing costs helped lead to “tepid” loan demand from businesses, said CEO Charlie Scharf, putting a lid on how much interest the bank can collect. All the while, the $1.9 trillion-asset company had to shell out more in interest to keep depositors happy, since they can find higher interest rates elsewhere.

The two factors caused Wells Fargo’s net interest income — the difference between its interest revenues and its interest expenses — to fall to just under $12 billion for the first time since the Federal Reserve started raising rates in 2022.

“They’re still having to pay more to their deposit customers,” said Kyle Sanders, senior equity research analyst at Edward Jones. “Until the Fed cuts, that’s going to continue to happen.”

Investors’ negative reaction on Friday grew out of their expectation that Wells Fargo might upgrade its net interest income guidance for the year, Sanders said. The bank’s balance sheet came into the rate hike cycle better positioned for higher rates than some other banks. Its consumer-heavy deposit base fueled hopes that less-savvy customers wouldn’t notice rates were rising.

But like others in the industry, Sanders said Wells has “consistently underestimated” the size of increases in its deposit costs. While rising interest expenses have been a bigger pain for regional banks, megabanks such as Wells and JPMorgan Chase have also felt the pinch in recent months.

While Wells stuck to its forecast that net interest income will drop by 7% to 9% this year, the bank also said that it anticipates the metric will land at the higher end of that range.

Even so, Sanders said the stock-price decline on Friday seems “a little bit overdone.” He and other analysts pointed to strong growth in the company’s revamped credit card business and its fee-driving investment banking business — two areas that CEO Charlie Scharf has built up during his nearly five-year tenure.

Piper Sandler analyst Scott Siefers wrote in a note to clients that the initial pressure on the bank’s stock price Friday may fade “as better fees may overwhelm the higher cost guide.”

Overall, the company’s profits rose to $4.9 billion between April and June, up from $4.6 billion in the first quarter. Higher fee revenues and Scharf’s campaign to trim noninterest expenses — the bank’s employee headcount is down 11,000 compared to last year — helped reduce the drag from lower interest income.

The higher interest expenses were partly due to depositors’ “continued migration into higher-yielding alternatives,” Mike Santomassimo, Wells Fargo’s chief financial officer, told reporters Friday. Rather than keeping their cash in low-paying checking accounts, consumers have shifted toward higher-yielding savings accounts or certificates of deposit.

However, the pace of that migration “has slowed and continues to slow,” Santomassimo said. Interest expenses climbed 3.3% during the quarter, compared with a 5.4% increase in the first quarter and a 12% jump in the fourth quarter of 2023.

One driver of the most recent increase: Wells Fargo bumped up the interest it pays on deposits in customers’ wealth and investment management accounts, a change that will cost the bank $350 million this year.

There was one silver lining to the higher rates the San Francisco-based bank paid on deposits. Wells grew deposits “in every line of business for the first time in a long time,” Santomassimo said. The pricing for corporate deposits is competitive and thus adds to interest expense pressures, he noted.

But the deposits are “going to be very valuable over a long period of time, particularly as rates start to come back down,” Santomassimo said.

Source: nationalmortgagenews.com

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Mortgage Rates Shrug Off Seemingly Threatening Inflation Data to hit 5 Month Lows

Yesterday was all about the CONSUMER Price Index (CPI), which helped mortgage rates drop at the 2nd fastest pace of the year.  Today brough the PRODUCER Price Index (PPI), and the message was a bit different.

While PPI is not in the same league as CPI in terms of its impact on rates, there have been several recent examples that have left a mark on the market, for better or worse.  When this morning’s installment came out, it looked like we’d have another example to count, and not the good kind.

Between the new headline and the revision to last month’s numbers, annual PPI ended up a half a percent higher than the market expected. If that sort of thing happened in CPI, rates would absolutely skyrocket. Even though it was a PPI problem, it still would not have been a surprise to see at least SOME upward pressure today.

But instead, rates managed to move LOWER, albeit not by much.  Still… any improvement in the wake of such numbers requires an explanation.  In this case, it came down to the underlying components of the PPI data not translating to the consumer-facing inflation metrics that guide rate policy.  

In other words, sometimes higher PPI suggests upward pressure on the PCE inflation data (the broadest national measure of consumer inflation and the most closely-watched by the Fed), but today’s report did not.  Bonds initially panicked for a split second, but then eased into modestly stronger territory and stayed there all day without any drama.

The average lender was able to drop rates by just a hair, but even if victory were limited to preserving yesterday’s victory, that would be victory enough. 

Source: mortgagenewsdaily.com

Apache is functioning normally

by UrbanTurf Staff

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Long-term mortgage rates fell for the fifth time in six weeks on Thursday. 

Freddie Mac reported 6.89% as the average on a 30-year mortgage, down six basis points from last week. 

“Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week and mortgage rates followed suit,” said Sam Khater, Freddie Mac’s Chief Economist. We’re also seeing more inventory on the market, including a fair number of listings with price cuts, which is an encouraging sign for prospective buyers.”

The UrbanTurf Mortgage Rate Disclaimer: The rates reported by Freddie Mac for 30-year mortgages are usually the best rates that the most qualified borrowers can get, so borrowers or those considering refinancing should not necessarily read this news and think that they can go out and get a loan with the quoted interest rate.

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This article originally published at https://dc.urbanturf.com/articles/blog/mortgage_rates_tick_down/22505.

Source: dc.urbanturf.com

Apache is functioning normally

Two days after regulators levied more fines against Citigroup for poor data quality management, the megabank said that it’s not changing its expense guidance for 2024, and it will aim to absorb any additional remediation-related costs into the firm’s existing spending plan.

Citi also said it will adhere to its previously released capital distribution plan, which includes an increase to its common dividend, and it plans to repurchase $1 billion of common stock in the third quarter. In the first quarter of this year, Citi bought back $500 million of common stock.

The updates came during Citi’s second-quarter earnings call, less than 48 hours after the Federal Reserve and the Office of the Comptroller of the Currency assessed a total of $136 million in civil money penalties against the bank for violating a pair of 2020 consent orders related to its risk management and internal controls systems.

Citi, which is engaged in a multiyear risk-management overhaul to correct and enhance those systems, even as CEO Jane Fraser tries to simplify the company and drive higher returns, has 30 days to submit a “resource review plan” to the OCC. The plan is supposed to show that the bank has enough resources allocated to the overhaul to achieve compliance in a timely and sustainable manner.

Citi’s plan, which executives say is already being drafted, will also help determine if additional resources, including more spending, are necessary to finish what the $2.4 trillion-asset company has called a “transformation” of its risk-management programs.

Citi “has been able to find productivity opportunities” this year to keep it within its stated expense guidance, and the bank will stay focused on finding more such cost savings in the event that more compliance spending is needed, Chief Financial Officer Mark Mason told analysts Friday.

Citi has been forecasting total operating expenses of between $53.5 billion and $53.8 billion for the full year. On Friday, Mason said the final tally will likely wind up on the higher end of that range.

“We are actively managing that with an eye towards what’s required” for the risk management overhaul in order “to keep it on track, to accelerate in areas where we’re behind,” Mason said.

Analysts pressed Mason and CEO Jane Fraser about the bank’s lack of sufficient progress, at least in the eyes of its regulators. Mike Mayo of Wells Fargo Securities asked why the 2020 consent orders haven’t been resolved.

“Is it not enough people? Is it not enough money? Do you need to look at it in a different way?” Mayo said.

Fraser responded that the project “is a massive body of work” with multiple layers, and pointed out that the regulators did acknowledge this week that Citi has made some progress.

Vivek Juneja of JPMorgan Securities wondered how much more time Citi needs to fix everything.

“How much longer for you to sort of get this past you?” Juneja said. “Are you talking a couple of years?”

The bank is trying to “get this done as quickly but as robustly as possible,” Fraser responded.

“We’re doing this by making strategic fixes and investments, rather than what I would call the old Citi way, which is a series of Band-Aids that remediate but don’t actually fix the underlying issue,” she said. “I’m not expecting this to change the time frames.”

Amid Citi’s latest regulatory troubles, the company reported a solid quarter. Total revenues were $20.1 billion, up 4% year over year, in part because each of the bank’s five business lines, including its long-languishing wealth segment, grew profits during the second quarter.

Excluding the impact of divestitures, firmwide revenues rose 3%. As part of Fraser’s plan to turn around Citi, the bank has been selling and winding down certain non-U.S. consumer franchises.

The increase in revenues and a decrease in expenses helped drive up Citi’s net income, which totaled $3.2 billion, a 10% increase from the same quarter last year.

Growth in Citi’s banking segment, which includes both business banking and investment banking, was particularly strong compared with the year-ago period, rising 30%.

Operating expenses declined 2% year over year to $13.4 billion, primarily as a result of an organizational simplification and other cost-reduction measures, Citi said.

The decrease in expenses was partially offset by the regulatory fines and other ongoing investments in the risk management overhaul, according to the bank.

Source: nationalmortgagenews.com

Apache is functioning normally

Rates were prepared to make a big move in one direction or the other heading into today’s high stakes inflation data.  Fortunately, the Consumer Price Index (CPI) came in quite a bit lower than expected, leading to a sharp decline in rates at the average lender.  

30yr fixed rates had already trickled back below 7% yesterday.  Today’s drop saw them surge easily under 6.90%, making for the 2nd largest single day drop so far this year.  The improvement also adds to the case that rates are in a downtrend after their last major peak in late April.

CPI is the first major national inflation reading for any given month.  Investors focus more on the “core” which excludes food and energy.  Month over month core CPI needs to average .17 over 12 months to hit the Fed’s 2% inflation target.  Last month’s report was promising because that number fell to .163–the lowest since 2021 at the time.

Today’s core CPI reading was markedly lower, dropping all the way to 0.065.  Other components of the report, such as the closely watched housing expense metrics saw even larger drops relative to their recent range.  Housing inflation has been a problem for the broader CPI measurements and this is the first report that shows the shift that the market has been waiting for.

While this is the most promising inflation data we’ve seen in years, and while it is made even more promising by adding on to last month’s lower readings, these are still only 2 consecutive months of good news.  We’ve arguably seen 2 months of good news in the past only for things to turn back around.  Granted, that’s less likely this time, but the Fed and the market can’t quite bet on it just yet.  Otherwise, today’s rate drop would have been even bigger.

Source: mortgagenewsdaily.com

Apache is functioning normally

Powell to Congress: Higher rates are “the absolute best thing we can do for the housing market…” – “…particularly for younger people who are not yet in the housing market.”

By Wolf Richter for WOLF STREET.

However we want to interpret this, it’s fascinating. Powell told Congress on Tuesday: “There’s no question that higher interest rates are making it harder to buy homes in the short term. But in the longer term, this is the best thing, particularly for younger people who are not yet in the housing market.”

Did he mean that younger people would benefit from lower home prices, or at least an end of the home-price increases, and that higher rates are going to accomplish that? I don’t know. To speak that truth would be, sacrilege?

“Higher interest rates” means higher than they used to be, so even if the Fed cuts its rates a few times in the future, they’d still be much higher than before the pandemic, and mortgage rates would still be much higher as well.

The purpose of the higher rates is to “get back to 2% inflation for the whole economy,” he said, according to MarketWatch, “so that the housing market can be on a better foundation.”

These higher rates are “the absolute best thing we can do for the housing market and for the economy [so as] to sustainably bring inflation back down, so that people aren’t talking about it anymore,” he said.

Higher for Longer: 7% mortgages a year so far.

According to the Mortgage Bankers Association today, the average conforming 30-year fixed mortgage rate was 7.0% in the latest reporting week.

The 7% mortgage has been a fixture in the housing market for a year. This measure of the average mortgage rate has hovered around 7% since July 2023, ranging from 6.75% at peak-Rate-Cut Mania in January 2024 to 7.9% in October 2023. It has been above 6% since September 2022.

People who financed a home purchase with mortgage rates at 6% or 7% or over 7% since September 2022, hoping that they would be able to refinance that mortgage quickly into a 4% mortgage, have gotten stuck with their mortgage payments.

These new homeowners with 7% mortgages and big mortgage payments may be forced to cut back spending on other goods and services, thereby lowering demand for those goods and services. The Fed is counting on them to do that. They’re one of the official transmission channels of Fed policy rates to the overall economy, to lower demand, and thereby lower inflationary pressures.

Potential homebuyers today have to do the same calculus: When will mortgage rates drop far enough to make it worthwhile refinancing a 7% mortgage, given the points and expenses involved in a refi? This is a tough call – especially since renting an equivalent house is now a lot less costly on a monthly basis.

Compared to the pre-QE era, a 7% mortgage rate is not breaking new ground: From 1970 through 2001, mortgage rates ranged from 7% to 18%. Lower home prices made those higher mortgage rates work.

But ultra-low mortgage rates fuel housing bubbles. When mortgage rates dropped as low as 5.5% in 2005, they fueled Housing Bubble 1, which led to the Housing Bust from 2006-2012. The pandemic-era below-3% mortgages did a wonderful job inflating housing prices in a historic manner.

But now, these 7% mortgages conflict with the too-high prices. And something has to give.

With prices too high, buyers’ strike continues.

Mortgage applications to purchase a home in the latest reporting week remained near the historic lows in the data going back to 1995, and have been there over the past 12 months. The record lows in the data were set in November 2023 and February 2024. Note the mini-spike in January 2024 at the peak of Rate-Cut Mania.

Mortgage applications to purchase a home in the latest week plunged by almost half from the same period in 2021 and 2019:

  • From 2023: -13%
  • From 2022: -36%
  • From 2021: -47%
  • From 2019: -48%

Mortgage applications are an early indication of home sales volume – an early indication that buyers who need mortgages remain on strike because prices are too high with those rates:

Inventory has been rising, as sales plunged amid rising new listings, and so active listings exploded in some metros on a year-over-year basis in June, and for the US overall, they jumped by 37% year-over-year. And there’s now plenty to choose from, but prices are too high.

Mortgage applications to refinance a home collapsed in 2022 when mortgage rates surged, and have remained steadfastly at these collapsed levels. Refis without cash-out have nearly vanished. Most of the few refis that are still taking place are cash-out refis.

In the latest reporting week, applications for refinance mortgages edged down further and were down by 84% from the same week in 2021 and by 70% from the same week in 2019.

Refis are a function of mortgage rates. They had experienced a historic boom when mortgage rates plunged to the 2.5%-3.0% range. And they collapsed when mortgage rates began to surge starting in early 2022.

The chart shows the inverse relationship between refi applications (red) and mortgage rates (blue).

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Source: wolfstreet.com