Today's Mortgage Rates - 11/21/2024

Fed Cuts, Mortgage Rates Hold Level

Mortgage rates were nearly unchanged this week.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) decreased by one basis point (0.01%) to 6.78%, holding at about a mid-July stance.

Average offered rates for 15-year fixed-rate mortgages also just barely moved, also sporting just a one basis point (0.01%) decrease to 5.99%, right back to where they were two weeks ago.

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 remained fairly narrow. The Mortgage Bankers Association reported that the initial fixed interest rate on a hybrid 5/1 ARM was also virtually steady this week, increasing by a single basis point to 6.06% The current 72 basis point gap makes the choice of this ARM somewhat more compelling for homebuyers seeking a break on monthly payments compared to its fixed-rate counterpart, at least for the next five years.

With financial markets still digesting the election outcomes, the Federal Reserve closed its November meeting with an as-expected 25 basis point cut in the federal funds rate. The post-election rally in "risk" assets such as stocks and cryptocurrencies mostly came at the expense of bonds, where investors had already been expressing concerns about future budget deficits and the increases in government debt needed to finance them. As such, the yields that most influence mortgage rates have increased in recent days.

With the election and the Fed meeting done, investors will turn again to focusing on the incoming economic and inflation data to discern what comes next. While there is still a strong likelihood that the Fed will trim rates again at its December meeting, at least 25% of futures markets investors expect the Fed to hold steady. The most recent inflation data covering the Consumer and Producer price indexes for October both came in slightly on the stronger side of expectations; annualized core CPI remained steady at 3.3%, while core PPI prices returned to July levels of 2.4%.

There's plenty more data due yet before the next Fed decision on policy, including PCE prices, the Fed's favored gauge of inflation, and additional updates on labor market conditions, It's likely that these will dictate if the Fed makes another move in the near term or simply changes its outlook and plans for policy in 2025.

Of course, that's a bit further out in the future. More immediately, the yields which most influence mortgage rates are up compared to where they began the week, and this points to slightly higher mortgage rates in the markets now and in the next few 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.