Mortgage Update 8/5/2024
As of Friday, the national average 30-year fixed mortgage rate was at the lowest level of 2024. An additional drop this morning brought that number to the lowest level since April 2023.
Rates have been moving lower due to an ongoing bond market rally that began in May. That rally is driven by softer inflation/economic data and an increased understanding that the Fed will consider rate cuts.
On Friday, the July Jobs Report was released, showing Headline job creation fell to 114k in July, below the forecast of 175k. In addition, the unemployment rate went up to 4.3% from 4.1%, and wage growth fell to 0.2% from 0.3%
With the latest jobs numbers (as well as corrections to previous months’ numbers that showed the numbers were worse than initially reported), there are concerns that we may be entering a recession. Polymarket and Goldman Sachs’ are now predicting a 26% and 25% chance of a recession, respectively.
A big reason for the concern about recession is what is known as the Sahm Rule. The Sahm Rule signals a downturn once the unemployment rate increases 0.5 percentage points above its previous 12-month low. After the unemployment rate jumped to 4.3% in July from 4.1% in June, the Rule has been triggered. Also, the unemployment rate has accelerated every time this threshold has been hit.
Interest rate futures are now predicting a 75 percent chance of a 50-basis point rate cut in September, with some experts predicting three rate cuts until the end of the year. The prediction market also sees a possible emergency rate cut before the next Fed meeting at 7%
Today’s national average 30-year mortgage rate is 6.34%
