Today's Mortgage Rates - 11/10/2024

Mortgage Rates Rise, Fed Ponders

Mortgage rates firmed up again as the Fed looks to conclude a policy-setting meeting.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) increased by seven more basis points (0.07%) to 6.79%, the highest it has been since mid-July. While the increase this week was small, a post-election bond market rout will need to reverse in coming days to keep rates from rising more sharply again.

The average offered rate for a 15-year fixed-rate mortgage just barely edged higher, sporting just a one basis point (0.01%) increase to a flat 6%, holding at about early August levels for the moment.

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 a meaningful decline this week, falling by fifteen basis points (0.15%) to land at 6.05%. The current 74 basis point gap makes the choice of this ARM rather more compelling for homebuyers seeking a break on monthly payments compared to its fixed-rate counterpart, at least for the next five years.

As we write this, the Federal Reserve is wrapping up its November meeting, and a quarter-point cut in the federal funds rate is expected. That said, we have written in recent MarketTrends commentary that there is also an argument to be make for keeping policy steady at this meeting, given solid growth, firm labor market conditions and core PCE inflation that has leveled off at about 2.7% over the last five months. Still, the financial markets expect and are positioned for a cut, and the Fed not making a change risks unwanted disruption.

In recent weeks and most especially in the aftermath of Tuesday's election, the longer-term bond yields that most strongly influence mortgage rates have moved appreciably higher. If the recent selloff fails to reverse, long-term fixed mortgage rates will continue higher. Election results are still being tallied; once the dust settles, a clearer sense of the direction of mortgage rates will emerge.

At present, yields and mortgage rates appear to have stabilized and perhaps even declined a little bit. It's too soon to know if this will last. Yields may have retreated somewhat, but remain above where they were last week. At best, mortgage rates may hold steady with a slight downward bias over the next couple of 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.