Interest Rate and Market Update

September 18, 2024

Market Update

Jumbo 30YR Fixed purchase rates are down to 6.000%, and Jumbo purchase ARM rates are holding at 5.625% today. Down-payment assistance 1^st mortgage programs are between 5.500% and 5.625% for 100% financing. We also have a new down-payment assistance program that offers 100% to 101.5% financing for buyers with a credit score as low as 600. No first-time homebuyer requirement and no income limit requirement. There are three options for this program. Buyers can take a 3.5% or 5% 2^nd mortgage option, to get to 100% or 101.5% financing, or they can take a 3.5% 2^nd mortgage option that requires no payment, no interest, and is forgivable if the buyer keeps the home as their primary residence for 10 years and does not refinance the 1^st mortgage.

Fed Rate Cut Debate:

Former Fed Vice Chair Donald Kohn suggests that the Fed could go either way on a rate cut: 0.25% or 0.50%.
The market expects a 0.25% cut but some experts think it should be a more aggressive 0.50% cut.

Market Expectations:

The Fed has shifted its approach to timing and size of cuts, leading to predictions of a total 1% rate cut this year, with an additional 1.25% next year.

Labor Market Update:

The unemployment rate is currently 4.2%, slightly lower than last month’s 4.3%, contradicting Fed members’ predictions that unemployment wouldn’t exceed 4.1% this year.

Inflation and Jobs Data:

The Producer Price Index (PPI) rose 0.2% in August, showing a slowdown in inflation from 2.1% to 1.7%, partly due to lower energy prices.
Jobless claims remain stable, as expected.

Homeowner Equity & Bonds:

Homeowners with mortgages saw an 8% rise in equity year-over-year.
The 2-year Treasury yield has been higher than the 10-year for an unusually long period (yield curve inversion), but this is now expected to change.