Today's Mortgage Rates - 10/17/2024

Mortgage Rates Rise Again

Mortgage rates rose again this week, and have now returned to mid-August levels.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) increased by another twelve basis points (0.12%) to 6.44%, and have climbed about three-eighths of a percentage point over the last three weeks.

The average offered rate for a 15-year fixed-rate mortgage moved up rather a bit more than its longer-term counterpart, increasing by twenty-two basis points (0.22%) and has increased by nearly a half-percentage point since mid-September.

A 5/1 ARM might offer a homebuyer slightly lower-cost alternative to a long-term fixed-rate mortgage, but the difference in rate between 30-year FRMs and 5/1 ARMs continues to be narrow. The Mortgage Bankers Association reported that the initial fixed interest rate on a hybrid 5/1 ARM posted an increase of eight basis points (0.08%) to 6.14%. Presently, the thirty basis point difference between the rate for a 30-year FRM and that for a 5/1 ARM is quite small, so it's hard to argue that this ARM provides much of a lower-cost alternative to a fully-fixed 30-year mortgage.

Mortgage rates firming up again isn't especially welcome news, but the increase has actually been caused by good news. In recent weeks, there have been solid reports regarding the labor market, stable-if-soft manufacturing conditions and a pickup in service-sector activity. All point to an economy that doesn't seem to need the kind of boost that larger cuts in short-term rates by the Fed might bring. As such and in turn, investors have largely recalibrated their expectations for rate cuts over the next couple of months.

At the same time, there has a bit of a lack of further progress in quelling inflation, as the Consumer Price Index for September was firm compared to August. As well, so-called "core" CPI inflation actually ticked 0.1% higher on an annual basis to 3.3%, putting it back to where it was in June. While not the Fed's preferred measure of price pressures, it nonetheless does point to firmness in inflation, and this too may give the Fed reason to make only a small change (or perhaps none) to monetary policy next month.

It does appear as though the recalibration by investors regarding Fed policy has now mostly run its course. The underlying yields that most influence mortgage rates have generally stopped increasing over the last few days, so there doesn't seem to be a whole lot of upward pressure on mortgage rates right now. In fact, and despite this week's increase, the stability in these yields over the last few days suggests that there may be space for mortgage rates to decline a slight bit in the coming days.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.