Today's Mortgage Rates - 10/05/2024

Slight Firming For Mortgage Rates

Mortgage rates ticked just a little higher this week.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) increased by four basis points (0.04%) to 6.12%. It is the first increase in rate for the most popular mortgage type and term since mid-August.

The average offered rate for a 15-year fixed-rate mortgage rose rather a bit more than its longer-term counterpart, climbing nine basis points (0.09%) to 5.25%, just about where it was a few 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 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 eleven basis points (0.11%) to 5.87%. Presently, the quarter-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 a lower-cost alternative to a fully-fixed 30-year mortgage.

The ebb and flow of financial markets at the moment are being impacted by not only economic factors, but also by expanding trouble in the middle east and the on-going war in Ukraine. Oil prices are firming of late, which could have lagged effects on inflation, and fair economic news is starting to suggest that the Fed may only need or want to make more measured moves as the fourth quarter proceeds. Friday's employment report will likely be influential in this regard, and could serve to unwind some investor bets on more aggressive rate cutting. As well, a longshoreman's strike in east coast and gulf ports only adds to the current uncertainty, and the impacts and human costs from Hurricane Helene are only starting to be understood.

These things plus plenty of others are keeping investors a bit on edge, and markets always seem to be unsettled at the start or end of a quarter. At least for the moment, the yields that underlie mortgage rates continue to firm up, and this suggests that mortgage rates will be ticking a little higher yet in the coming days. Still, they aren't poised to go too far, so the lowest home financing costs in about two years will still be available in the market.

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.