Mortgage Rates Today, Sep. 17, 2024: Risks as Fed Countdown Nears End
The average 30-year fixed rate mortgage is 5.59% today, a decrease of 0.01% since yesterday. The 15-year fixed mortgage rate stands at 4.58%, down by 0.08%. The 30-year FHA mortgage now averages 4.97%, having dropped by 0.06. Meanwhile, the 30-year jumbo mortgage rate is 6.17%, reflecting a decrease of 0.06%.
In brief
"Markets rarely ‘so torn’ on Fed rate expectations so close to FOMC meeting," ran a MarketWatch headline yesterday afternoon. The FOMC is the Federal Open Market Committee, which is the Federal Reserve's rate-setting body.The FOMC begins a two-day meeting today. And it will deliver two documents at 2 p.m. Eastern tomorrow, followed by a news conference 30 minutes later.
Seriously, it's hard to overstate how big an impact those could have on mortgage rates tomorrow and for weeks to come.
A couple of economic reports today might affect mortgage rates. However, any impact they have will likely be overtaken by tomorrow's documents and news conference.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 5.59% | 5.7% | -0.01% | -0.93% |
| 15-Year Fixed | 4.58% | 4.76% | -0.08% | -1.1% |
| 30-Year Fixed FHA | 4.97% | 5.89% | -0.06% | -0.86% |
| 30-Year Fixed VA | 5.01% | 5.22% | -0.01% | -0.83% |
| 30-Year Fixed USDA | 4.95% | 5.15% | -0.02% | -0.82% |
| 30-Year Fixed Jumbo | 6.17% | 6.27% | -0.06% | -0.85% |
| 5/6 Year ARM | 6.2% | 6.32% | +0% | -0.61% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 5.67% | 5.78% | +0% | -0.95% |
| 15-Year Fixed | 4.59% | 4.77% | -0.08% | -1.08% |
| 30-Year Fixed FHA | 4.96% | 5.88% | -0.06% | -0.86% |
| 30-Year Fixed VA | 5.02% | 5.23% | -0.01% | -0.81% |
| 5/6 Year ARM | 6.29% | 6.41% | +0.01% | -0.57% |
Markets increasingly expect a large cut from the Fed
Yesterday, we reported: "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%."
Now the FedWatch tool puts the chances of a large cut at 67%. This isn't because investors have received new information. It's almost certainly down to markets' herd instincts: follow the crowd.
And that's dangerous. Because the Fed itself is studiedly indifferent to market sentiment. And it will base tomorrow's decision on the interests of the nation, not those of investors.
Whatever happens tomorrow, a significant proportion of investors will be proved wrong. And that's likely to generate volatility in all markets, including the one that determines mortgage rates.
Watch out for the dot plot
At least as important as the rate announcement itself will be the quarterly summary of economic projects, which is released simultaneously. This includes the so-called dot plot, which is a graph on which each FOMC member plots where he or she thinks interest rates will move in the coming months and years.
If the dot plot suggests rates will fall quickly, that should be good for mortgage rates. But even that may not be enough for investors.
Yesterday, we quoted a Wall Street Journal report from Saturday. It said some investors are pricing in an almost halving of the benchmark rate by the end of next year: to 2.75% from today's 5.25%.
Of course, we have no idea what tomorrow's dot plot will show. But we suspect that the projection of such a drop is highly unlikely.
Only a serious recession could trigger that type of fall, and the Fed is still hoping for a "soft landing." One of those happens when a central bank tames inflation without triggering a recession.
All of this creates huge risks for mortgage rates tomorrow. A larger (half-point) cut along with a dot plot that shows plenty of further cuts might send mortgage rates downward. But a smaller cut and fewer-than-expected future cuts could send them higher — and keep them there for the foreseeable future.
Don't forget tomorrow's 2:30 p.m. (ET) news conference, which will be hosted by Fed Chair Jerome Powell. He's an extraordinarily influential figure. And his words could pour oil on troubled waters. As long as he doesn't then set light to the oil.
Coming up
Mortgage rates today and tomorrow
A couple of this morning's reports are capable of moving mortgage rates, occasionally appreciably. But any movement they generate is likely to be swamped by tomorrow's Fed events.
By far the more influential covers retail sales in August. And they are expected to enter negative territory: slowing to -0.2% (revised since yesterday) from July's 1.0%. Anything below that -0.2% forecast could send mortgage rates lower. But a higher actual number could exert an upward force on those rates.
The other potentially important report today 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, the more likely mortgage rates are to fall.
Today's other reports (business inventories and the home builder confidence index) rarely affect mortgage rates much.
Tomorrow's two reports (August housing starts and business permits) normally have little or no impact on mortgage rates. And, even if they do manage to move them a bit, they'll likely be forgotten when the Fed starts dropping documents at 2 p.m. (ET).
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.
