What’s Ahead For Mortgage Rates This Week – January 16th, 2024
With the release of the CPI and PPI we received a clearer picture of what’s ahead. With the inflation numbers for CPI (Consumer Price Index) arriving a bit warmer than expected, there was some speculation that it could cause some hesitation from the Federal Reserve on reducing rates for this year.
We also were able to see the Year-over-Year CPI inflation rates with those as well coming in at slightly higher than expected. The projected outlook for the first quarter is likely that the Federal Reserve will hold its position and continue with maintaining interest rates as they have.
Although lending rates have drastically come down, much of it will depend on where the Federal Reserve moves this quarter or the next.
Consumer Price Index
Consumer prices rose somewhat faster at the end of 2023 and interrupted a slowdown in inflation, but the recent evidence still points to a further deceleration in the months ahead. The consumer price index rose 0.3% in December to mark the biggest gain in three months.
The rate of inflation over the past year also moved up to 3.4% from 3.1% in the prior month.
Producer Price Index
U.S. wholesale prices fell in December for the third month in a row, pointing to decelerating inflation in the months ahead.
The wholesale report might keep those hopes alive, especially since a weak PPI often portends a mild reading in the PCE index. That’s the Fed’s preferred measure of inflation.
Primary Mortgage Market Survey Index
• 15-Yr FRM rates saw a decrease by -0.02% with the current rate at 5.87%
• 30-Yr FRM rates saw an increase by 0.04% with the current rate at 6.66%
MND Rate Index
• 30-Yr FHA rates saw a -0.16% decrease for this week. Current rates at 6.00%
• 30-Yr VA rates saw a -0.15% decrease for this week. Current rates at 6.01%
Jobless Claims
Initial Claims were reported to be 202,000 compared to the expected claims of 210,000. The prior week was 202,000.
What’s Ahead
After the FOMC minutes for this week, next week should be a light release week with one major report being the Consumer Price Index and Producer Price Index which will show the inflation rates over December.
With the first FOMC minutes of the year, it sets the tone of the potential moves the Federal Reserve will make, with them remaining firm in their current stance of not employing any rate cuts, however given the more recent end of year reports, there is a likelihood that rate cuts will start this year. The last change in rates was in July of last year. The second most important report also being the final PMI (Manufacturing) numbers, which has largely met expectations without any irregularities.
With the New Year, the final week only featured the normal reports of Jobless Claims, S&P Shiller Home Price Index (YoY), and the Chicago Business Barometer. All of them will have limited impact compared to the GDP and the Inflation data reports that have already been released.
Rate locks play a crucial role in the mortgage application process, helping borrowers secure a favorable interest rate for their home loan. Here’s an explanation of the importance of rate locks and when and how to secure the best rate:
The final release of the GDP figures are the last large releases of the year before moving into Q1 of 2024, with the GDP report showing the economy had shown growth — particularly in Q3 with it tapering off by the end of the year. While the growth had been strong, it still was less than expected by analysts, however the final numbers do indicate we are on a track for a soft-landing and with the potential to all-together avoid a potential recession. The only other reports of note were the Personal Spending and PCE Index Prices.