Mortgage Rates Today, Sep. 16, 2024: Volatility Ahead!
The average 30-year fixed rate mortgage is 5.6% today, a decrease of 0.04% since yesterday. The 15-year fixed mortgage rate stands at 4.66%, down by 0.02%. The 30-year FHA mortgage now averages 5.03%, having dropped by 0.03. Meanwhile, the 30-year jumbo mortgage rate is 6.23%, reflecting a decrease of 0.01%.
In brief
At 2 p.m. Eastern on Wednesday afternoon, the Federal Reserve will announce the size of its virtually inevitable cut to general interest rates.
At the same moment, it will publish a summary of economic projections. That includes the "dot plot," which provides forecasts of where those rates will move in the coming months and years.
Then, 30 minutes later, Fed Chair Jerome Powell will host a news conference during which he'll expand on those documents and field questions from journalists.
We get rate announcements and news conferences eight times a year. And dot plots appear quarterly. But rarely do they carry as much weight as this Wednesday's do.
All this means a high risk of volatility for markets generally — and mortgage rates in particular — this week.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 5.6% | 5.71% | -0.04% | -0.92% |
| 15-Year Fixed | 4.66% | 4.82% | -0.02% | -1.02% |
| 30-Year Fixed FHA | 5.03% | 5.94% | -0.03% | -0.81% |
| 30-Year Fixed VA | 5.01% | 5.22% | -0.03% | -0.82% |
| 30-Year Fixed USDA | 4.97% | 5.17% | -0.01% | -0.8% |
| 30-Year Fixed Jumbo | 6.23% | 6.33% | -0.01% | -0.78% |
| 5/6 Year ARM | 6.2% | 6.32% | -0.02% | -0.61% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 5.67% | 5.78% | -0.01% | -0.95% |
| 15-Year Fixed | 4.67% | 4.83% | -0.02% | -1% |
| 30-Year Fixed FHA | 5.02% | 5.94% | -0.03% | -0.81% |
| 30-Year Fixed VA | 5.03% | 5.24% | -0.03% | -0.8% |
| 5/6 Year ARM | 6.28% | 6.41% | -0.02% | -0.59% |
Bond markets and the Fed
A month ago, just 25% of investors thought we'd see a large, half-point cut in general interest rates on Wednesday, according to the CME FedWatch tool. By this time last week, it had edged up to 30%. Over the weekend, that had shot up to 61%.
On the face of it, that should be good for mortgage rates. But there are worrying risks attached to this optimism.
That's because bond investors, who largely determine mortgage rates, seem to be taking an unreasonably optimistic view of where the Fed will take mortgage rates between now and the end of 2025.
On Saturday, The Wall Street Journal noted: "Traders in interest-rate derivatives are now pricing in a benchmark rate of about 2.75% by the end of next year, down from about 5.25% now. That would equate to 10 standard-size, quarter-point rate cuts — something the Fed is likely to do only in response to a recession."
Now, a recession isn't out of the question. But one may well be avoided.
And these investors have a history of being wildly wrong. Earlier this year, they were pricing in six Fed rate cuts in 2024. Well, the most we could see is three. And they're not guaranteed.
Mortgage rates fell when investors were expecting those six cuts. But they rose when optimistic expectations met reality. And they fell again only when those expectations became realistic.
Might we see a repeat later this year or early next? We'll have to wait to see,
Wednesday's Fed events
Most of us have been too focused on the size of the Fed's cut to general interest rates on Wednesday. But, as we said last week, its forecasts of where rates might go are likely to be at least as important.
To quote ourselves, "After all, who cares if there's only a quarter-point cut that day if there are more penciled in for Nov. 7, Dec. 18, and into 2025?"
Having said that, one potential driver of volatility on Wednesday will be the size of the cut. Usually, investors reach something close to a consensus about what they should expect. But that's not the case this time.
The CME FedWatch data we mentioned earlier suggest a large group of investors will be proven wrong, either 61% or 39% of them. And the ones that backed the wrong horse may generate high volumes of trades as they get themselves out of trouble. That could push mortgage rates appreciably higher or lower, depending on who's right.
Coming up
Mortgage rates today and tomorrow
This morning's lone economic report is the September Empire State manufacturing survey. That typically passes unnoticed by the market that largely determines mortgage rates.
However, it might warrant a glance today, especially if it meets expectations. It's expected to fall to -5.0% from August's -4.7%, according to MarketWatch. And that could cheer up those hoping for the sort of recession that justifies 10 rate cuts.
Tomorrow brings two reports that are often consequential for mortgage rates. The first and more influential covers retail sales in August. And they are expected to enter negative territory: slowing to -0.3% from July's 1.0%. Anything below that forecast could send mortgage rates lower.
The other potentially important report tomorrow concerns industrial production in August. Markets are expecting that to improve to a 1% expansion that month, compared to a -0.6% contraction in July. Again, the lower tomorrow's actual number the more likely mortgage rates are to fall.
There are a couple of other reports due tomorrow. But these (business inventories and the home builder confidence index) rarely affect mortgage rates much.
However, any movements in those rates tomorrow, or resulting from reports later in the week, are likely to fade into insignificance compared to Wednesday's Fed events.
Peter Warden has been covering mortgage, real estate, and personal finance for 15 years. He has appeared on The Mortgage Reports, Credit Sesame, Bills.com, and other publications.
