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Mortgage Interest Rates Today August 5 2024
What are mortgage rates today Monday August 5th, 2024. Why is the Dow Jones Industrial Average Down 1,000 points? Why are the 30-year U.S. Treasuries down and what does this mean to mortgage rates? Why is Gold and Silver down and what this mean? What is the Federal Reserve Board thinking?
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3 Replies
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What will mortgage rates be in 2024? How do U.S. Treasuries affect mortgage interest rates? How does the Dow Jones Industrial Average affect mortgage rates? Why are mortgage rates going up? What makes mortgage rates go down? When will U.S. Treasuries go down? What is pushing mortgage rates down? What is mortgage rates forecast in the next five years?
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Current Mortgage Rates (August 5, 2024)
- 30-Year Fixed-Rate Mortgage: 6.63%.
- 15-Year Fixed-Rate Mortgage: 6.16%.
- 7/1 ARM: 6.55%.
- 10/1 ARM: 6.76%.
Recently, mortgage rates have been on a downward trend due to positive inflation news and a cooling labor market, which has increased the chances of the Federal Reserve cutting rates later this year.
Dow Jones Industrial Average Drop
The Dow Jones Industrial Average down by 1,000 points is mainly because of fears about economic data indicating a slowing economy and potential stagflation. These worries are compounded by weak corporate earnings reports and geopolitical tensions that have spooked investors.
30-Year U.S. Treasuries Decline
- The yield on 30-year U.S. Treasuries has decreased.
- The drop in 30-year treasuries makes a flight to safety by investors worried about economic instability.
- When Treasury yields fall, it often leads to lower mortgage rates.
- With lower treasuries, mortgage rates drop because these rates are closely tied to long-term bond yields.
- Lower Treasury yields can make mortgage-backed securities more attractive to investors.
- Lower Treasury makes mortgage-backed securities attractive to investors and reduces consumer mortgage rates.
Gold and Silver Prices
Several factors have led gold and silver prices to drop:
Interest Rate Expectations: Anticipated cuts in interest rates by the Federal Reserve could decrease the prices of gold and silver since they do not pay any interest. Fed rate cuts and low interest rates make Gold and Silver less appealing than other assets earning interest.
Market Manipulation: Reports claim banks have been heavily short-selling silver, suppressing its price even when gold prices rise. Silver prices should be substantially higher than what they are today. However, banks are screwed because of such a high short position on silver. If silver prices take off, as they want to do, many banks will go bankrupt because they need to cover the short silver position.
Federal Reserve’s Position
- Currently, the Federal Reserve is in a holding pattern after skipping rate hikes in its recent meetings.
- The Fed closely monitors inflation and labor market data to determine when it should cut rates.
- If conditions allow, future cuts may begin around September, further affecting mortgages, among other economic activities.
Refinancing Considerations
Given the decreasing trend in mortgage interest, it might be worth refinancing now. Suppose you can save significantly every month or over time. In that case, you should look into streamlined refinance processes available for FHA/VA loans. These processes require minimal documents without needing new appraisals, thus making things easier for homeowners.
Mortgage Rates in 2024
Different experts forecast different mortgage rates next year. Here’s what some say:
- Freddie Mac expects the average 30-year fixed-rate mortgage rate to be around 6.73% on August 1, 2024, with minor fluctuations during the year.
Fannie Mae – predicts that the third quarter of 2024 will have predicted pricing around 6.80%.
National Association of Realtors – projects NAR expects third-quarter averages near 6.90%.
Mortgage Bankers Association forecasts an estimated value of close to 6.80% during the fourth quarter of 2024.
How U.S. Treasuries Affect Interest Rates For Mortgages
- Investors seeking safe long-term investments tend towards U.S. treasuries.
- Particularly ten-year treasury notes.
- Whose relationship with mortgage interest lies here?
Correlation: When yields fall on treasury bonds, borrowing costs, including those related to mortgages, generally also reduce.
Risk Premium:
- Treasury yields are also included in mortgage rates.
- For instance, if Treasuries yield at 3%, mortgage rates may hover around 5%.
- This covers the extra risk lenders take on with home loans.
How the Dow Jones Industrial Average Affects Mortgage Rates
- On its own, the Dow Jones Industrial Average (DJIA) does not directly impact mortgage rates.
- However, it mirrors wider economic conditions, which can affect these rates.
Economic Confidence: When the DJIA rises, it indicates strong economic performance, leading to higher inflation and interest rates since the Federal Reserve may increase them to curb overheating.
Economic Downturns: A declining DJIA could signal impending recession hence lower interest as the Fed attempts to stimulate borrowing and investment.
What Causes Mortgage Rates To Go Up
Several factors can push up mortgage rates:
Inflation: When inflation expectations rise, lenders demand higher interest to compensate for reduced purchasing power over time.
Federal Reserve Policy: Typically, when mortgages rise following rate increases by the FED in an effort against inflation.
Government Borrowing: Heightened government debt issuance leads to upward Treasury yields, thus affecting home loan prices accordingly.
What Makes Mortgage Rates Drop
Conversely, mortgage rates can go down due to:
Economic Slowdowns, Downturns, and Recessions typically result in lower interest rates as the Fed cuts its base rate to revive growth.
Low Inflation: Lowering Inflation Real returns on loans rise, leading to decreased lending costs during periods of stagnant or falling price levels.
Increased Demand For Safe Investments: In times of heightened risk aversion among investors toward equities, etc., people tend to flock towards safer assets like U.S. Treasuries. This causes their yields to fall, which subsequently lowers mortgage costs.
Federal Reserve Policy: If the central bank reduces its key short-term interest rate, mortgages usually decline because banks borrow more cheaply, allowing them to offer cheaper loans.
Forecast For U.S. Treasuries
U.S. Treasury yields are expected to change depending on how well or poorly the economy is doing overall. If inflation cools off and slows as expected in 2024, treasury prices might fall further. Still, other factors, such as worldwide political events, will always affect this sort of thing, such as ongoing economic data releases, etcetera!
What Is Pushing Down Mortgage Rates?
Factors That Have Recently Contributed Towards Decreasing Home Loan Costs Include:
- Cooling Inflation Decreasing price levels.
- This means less pressure on the Federal Reserve System to maintain high benchmark overnight funding costs.
Economic Uncertainty:
Worries about slowdowns and recessions make risk-averse investors prefer safe assets like U.S. government bonds, pushing down their yield.
The Fed’s signals of possible future cuts due to changing circumstances have also made mortgages less expensive lately!
Mortgage Rate Predictions Over Five Years Period
- Long-range predictions regarding housing finance charge movements should always be clear.
- This is because many economic issues determine them. Here’s some general guidance, though.
Between 2024 and 2025: Expect a gradual decrease if stable prices and moderate GDP expansion occur afterward.
From 2026 Until Nine Years Later: Stabilization or a slight uptick is likely after vigorous post-recession recovery with renewed pressures from fast-rising wages/incomes, etc.
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The Federal Reserve Board is expected to cut interest rates in September.