R.A.T.E.S. ~ 9.28.24
Your Weekly Real-time Analysis & Trends in the Economy & Securities for last week!
Economic Data and the Fed’s Focus
This week’s economic news didn’t shake things up too much. Inflation, measured by the Fed’s favorite gauge, Core PCE, was lower than expected, reinforcing the idea that the Fed is focusing more on employment data. We had a slight uptick in rates but nothing crazy. Keep an eye on next Friday’s jobs report—it has the potential to significantly impact mortgage rates depending on the outcome.
What's going on with conforming loan limits?
You might see some lenders advertising new conforming loan limits, myself included. Typically these loan limits don’t come out until the end of the year, technically they aren’t officially out yet. However, a few lenders have a habit of predicting these limits early, using a formula based on home price data. They aren’t 100% certain, but their estimates are usually pretty close.
The calculation comes from the FHFA’s house price index, which reflects home price appreciation. Over the past three months, home prices have grown by less than half a percent each month. If this trend continues, we could see the new loan limit land around $800,950. While some lenders are advertising higher limits now, expect them to adjust once the official numbers come out in two months.
Is there a refi boom on the horizon?
The question of a refinance boom depends on how you look at it. Refi activity has surged compared to recent lows, but we’re still far from the refi frenzy seen in previous years when rates were lower. Many homeowners locked in rates in the 2-3% range and won’t have a reason to refinance unless they’re consolidating debt or have other financial goals. While refinance activity may increase, it’s unlikely we’ll see a significant boom anytime soon. With that said, we are getting so many inquiries to pull equity out of their homes to pay down credit card debt. Thankfully, HELOCs and HELOANs now have a very streamlined process so it is easy on everyone involved.