Today’s Mortgage Rates & Forecast May 29, 2024: Rates Climb
One-Liner
After a good first half of May, mortgage rates are rising again because the economy is unexpectedly strong and inflation, persistent.
What’s Driving Mortgage Rates Today?
Mortgage rates climbed appreciably yesterday. That was mainly because consumer confidence bounced higher after calming for three months. Those rates tend to rise on signs the economy is strong and fall on data that show it’s weakening.
What To Watch Out For This Week
There’s nothing on today’s calendar that’s likely to affect mortgage rates much, probably at all. But investors may be adjusting their positions ahead of tomorrow’s gross domestic product (GDP) report and Friday’s inflation report, the personal consumption expenditures (PCE) price index. And that repositioning could cause some volatility.
Markets are expecting the second reading of GDP in the first quarter to be revised down tomorrow to 1.2% from 1.6%. Anything below 1.2% could drag mortgage rates lower. But anything higher could push them upward.
Friday’s PCE price index for April is expected to hold steady again. It’s been close to stagnant all year. For lower mortgage rates, we’d like to see some falls in inflation rates. But any appreciable rises could be disastrous.
Further Ahead
Next week’s jobs report (the “employment situation report”) is one of the “Big 2” economic reports with loads of potential to move mortgage rates. For rates to fall, we need to see on the jobs report:
Fewer new jobs created
A higher unemployment rate
Smaller rise in hourly wages than expected
Markets are currently viewing all economic reports through the prism of their effect on the Federal Reserve’s rates policy. The Fed’s next rates announcement is due on Jun. 12. And May’s consumer price index (the other of the Big 2) is scheduled for release that morning.
Almost nobody is expecting a cut in general interest rates that day. But they are hoping that the documents published and the news conference that follows will suggest that such cuts are still likely to begin in the third or fourth quarter. That could be very good indeed for mortgage rates, depending on just how upbeat the Fed is. Downbeat could be equally bad.
Forecasts
Expert economists who specialize in forecasting mortgage rates are divided in their predictions. Vanishingly few think average rates for 30-year, fixed-rate mortgages will dip below 6% this year. And some, including Fannie Mae, expect them to be at or over 7% at the end of 2024.
But others are a little more optimistic. For example, the Mortgage Bankers Association is forecasting 6.5% for the last quarter.
So, don’t expect significant falls. But there is a possibility of some gentle ones.
