Hi everyone,
Waiting for the Fed to cut before you take another look at mortgage rates?
You don't have to wait for those two things to happen together. Last week, the Fed left its rate unchanged, but mortgage pricing still improved.
That doesn't mean you should rush to buy or refinance. It means the next Fed meeting isn't the only reason to check your numbers.
Why would mortgage rates improve without a Fed cut?
The Fed sets a short-term policy rate. Mortgage pricing also responds to what investors expect from the economy.
Last Friday, Mortgage News Daily pointed to concerns about AI-company financing and slower future growth as factors helping the bond market—and mortgage rates. In plain English: investors were worrying about the economy losing some steam, which helped ease borrowing costs.
Inflation hadn't disappeared. September's PCE price index, a broad measure of consumer prices, was still 3.6% higher than a year earlier. So this wasn't an all-clear signal. Markets were weighing more than one thing.
Freddie Mac's October 29 weekly average for a 30-year fixed mortgage was 7.24%, down from 7.32%. That survey covered October 22–28; Friday's improvement came afterward. Neither figure tells you the rate available for your loan today.
What I'd take from that: you can check whether your options have improved without committing to anything. And you can decide the numbers still don't work.
Strategy Corner
Pick your payment before your target rate
If you're thinking, “I'll buy when rates reach a certain number,” I'd work backward first.
What monthly housing cost would feel comfortable while leaving room for the rest of your life?
Include principal and interest, property taxes, homeowners insurance, any mortgage insurance and HOA fees. Budget separately for maintenance, utilities and repairs. Taxes and insurance can change over time, too.
Then ask your lender to work backward from that monthly target using your planned down payment and estimated costs for the homes you're considering.
For a hypothetical example, if your monthly target is $2,800 and taxes, insurance and HOA costs total $650, that leaves $2,150 for principal, interest and any mortgage insurance. Maintenance and utilities still need room elsewhere in your budget.
This may point you toward a different price range than you expected. That's useful to know before you fall in love with a house.
Your next step: write down the payment you'd feel comfortable carrying, then get a realistic scenario built around it. You'll have something more useful to watch than a rate headline.
2 things I'm watching this week
All times Eastern.
Thursday, November 5, 8:30 a.m.: Can businesses produce more without costs rising as quickly? The preliminary third-quarter productivity and labor-cost report helps answer that question—and adds context to the inflation picture.
Friday, November 6, 8:30 a.m.: How did hiring and wages change in October? The jobs report gives us another check on the economy. A headline alone won't tell us how mortgage pricing will respond..
If you have a monthly payment in mind but aren't sure what home price goes with it, reply and tell me. We can start there.
Jessica Eiroa
Mortgage Loan Officer | NMLS #1380149
Five Star Mortgage | Company NMLS #1756744
702-285-0633
[email protected]
eiroahomeloans.com
Educational Disclaimer:
This newsletter is for educational and informational purposes only and is not a commitment to lend. Mortgage rates, programs, terms and availability are subject to change and borrower qualification. This information is not intended as tax, legal or financial advice.
Five Star Mortgage
2629 W. Horizon Ridge Pkwy Suite 140
Henderson, NV 89052