Mortgage Rates Today, Aug. 26, 2024: "The Time Has Come" for Rate Cuts
The average 30-year fixed rate mortgage is 6.31% today, a decrease of 0.09% since yesterday. The 15-year fixed mortgage rate stands at 5.38%, down by 0.12%. The 30-year FHA mortgage now averages 5.66%, having risen by 0.03. Meanwhile, the 30-year jumbo mortgage rate is 6.93%, reflecting a decrease of 0.03%.
In brief
Last Friday, Federal Reserve Chair Jerome Powell's speech delivered everything we could hope for.
"The time has come for policy to adjust. The direction of travel is clear," he said. "With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2 percent inflation while maintaining a strong labor market."
Unsurprisingly, the stock market had a great day. But you may raise an eyebrow over the reaction in other markets. Mortgage rates, for example, fell only modestly.
Maybe the muted response was partly a result of an inflation report due this Friday. If it were to show inflation as stubbornly persistent, that could blow Mr. Powell off course.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.31% | 6.34% | -0.09% | -0.61% |
| 15-Year Fixed | 5.38% | 5.44% | -0.12% | -0.66% |
| 30-Year Fixed FHA | 5.66% | 6.5% | +0.03% | -0.43% |
| 30-Year Fixed VA | 5.57% | 5.72% | -0.12% | -0.6% |
| 30-Year Fixed USDA | 5.6% | 5.64% | -0.05% | -0.44% |
| 30-Year Fixed Jumbo | 6.93% | 6.96% | -0.03% | -0.33% |
| 5/6 Year ARM | 6.75% | 6.79% | +0% | -0.41% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.45% | 6.49% | -0.06% | -0.56% |
| 15-Year Fixed | 5.39% | 5.45% | -0.1% | -0.66% |
| 30-Year Fixed FHA | 5.69% | 6.53% | +0.05% | -0.42% |
| 30-Year Fixed VA | 5.57% | 5.72% | -0.12% | -0.57% |
| 5/6 Year ARM | 6.8% | 6.85% | -0.02% | -0.47% |
Coming up
This week's key inflation report
We cheated in our earlier quotation from Mr. Powell's speech by cutting a sentence short. He did say, "The direction of travel is clear. But he continued, "And the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
The first real risk comprises incoming data, due this Friday. It's the personal consumption expenditures (PCE) price index for July. And it's the Fed's preferred gauge of inflation, though markets favor the consumer price index.
A headline in this morning's Financial Times posed the question, "Will the Federal Reserve's preferred inflation measure edge higher?"
According to MarketWatch, markets are expecting that it will but only by the tiniest bit on two of the report's four crucial components. They think the other two will hold steady.
That's unlikely to bother either mortgage rates or the Fed. But, were the inflation data to come in appreciably warmer than expected on Friday, we could see those rates moving higher and the Fed revisiting the timing of its cuts.
Also this week
Friday's PCE price index is by far the most potentially consequential economic report for mortgage rates this week. But others might trigger minor movements.
The ones most likely to do so are:
- Today — July durable goods orders. (Expected to rise appreciably)
- Tomorrow — August consumer confidence. (Expected to rise a little)
- Thursday — Second reading of gross domestic product during the second quarter. (Expected to be unchanged from first reading.) Plus initial jobless claims for the week ending Aug. 17 (Expected to just inch higher)
- Friday — PCE price index. (As above.) And consumer sentiment in August (Expected to be unchanged)
For lower mortgage rates, we'd like to see actual numbers below the ones markets are expecting.
Expert forecasts for mortgage rates
We told you last Monday that the Mortgage Bankers Association expects rates for 30-year, fixed-rate mortgages to average 6.7% in the current quarter. It thinks they'll fall gradually in each successive quarter, reaching 5.9% in the last quarter of 2025.
Since then, Fannie Mae has published its August update of forecasts. And it reckons that those same rates will average 6.6% this quarter, sliding down to 5.9% for the end of next year.
It's rare to find such close agreement between these two organizations. And Freddie Mac added to the harmonious chorus last week in a news release, saying, "In the August Economic, Housing and Mortgage Market Outlook, we forecast mortgage rates to gradually decline in the coming quarters."
Freddie no longer offers numbers routinely in its forecasts. But it's clearly singing from the same hymn sheet as the others.
These predictions are the best we have to go on. And they're way better than the feeling in your gut.
But never forget what the late Harvard economist John Kenneth Galbraith once wrote: "The only function of economic forecasting is to make astrology look respectable.”
