Weekly Mortgage Rate Update- 12-12-23

Mortgage rates took a pause after several weeks of improvements, we ended the week at about the same pricing overall. 

The key event last week was on Friday with non-farm payroll numbers showing 199k jobs added in November.  This was higher than the forecasts, and higher than October.  The job market has softened some in 2023, but is still very strong.  The average hourly earnings also increased slightly more than expected. This is inflationary and doesn’t help to make the case for lower mortgage rates.  With the unemployment rate dropping from 3.9% to 3.7%, the calls for lower rates in 2024 are already being once again re-adjusted.  The CME Fed watch chart I mentioned last week has already repriced, with now majority pricing in the first rate cut in May 2024 instead of March 2024. Its hard to take these predictions seriously as they are almost always wrong, but I mention them because they do drive current pricing trends, which is our focus.

This morning we got the first look at inflation for November with the CPI release.  It came in mostly at expectations but didn’t show the disinflation or deflation needed for better mortgage rates.   Month over month headline inflation increased 0.1% and the year over year is now at 3.1%. Core CPI(excludes food and energy) was up 0.3%, higher than October.  This is negative for pricing, especially as it comes at a time when oil prices are also down.  Inflation has some sticky points like shelter costs which increased 0.4% this month.   

The biggest event this week is Wednesday when the Fed meeting ends. There are zero expectations for a change in the rate at this meeting.  The real takeaway will be the fed rate projections with the release of the dot plot chart.  This hasn’t been released since September so it could be a market mover.  The last projections showed zero rate cuts in 2024.  If they show some cuts projected, that that could help rates.  If they stick to the script that they aren’t even thinking about cuts ,that could cause pricing to worsen. In a holding pattern until tomorrow when we get the results of the Fed meeting. 

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.

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