Let’s work together to Crack the Mortgage Rate Code for Metro Detroit. It might seem daunting, but fear not—I’m here to simplify it for you. Learn how to predict when mortgage rates will drop.
Next Week’s Rates Predictions 🔮 ~ Let’s Crack the Mortgage Rate Code
Hello, Metro Detroit neighbors! By late Sunday night, I’ll update this blog to show you where mortgage rates are heading for the upcoming week. Instead of focusing on mortgage rates today, it’s more helpful to understand why they’re changing and how to predict those shifts so you know when to lock your rate.
The key is learning how economic trends and upcoming news impact rates so you can lock in a lower rate when they’re on the decline rather than during a rise. To stay ahead of the game, keep an eye on this blog for weekly insights and bookmark Today’s Mortgage Rates: What’s Driving the Change for daily updates. This way, you’ll be better prepared to decide when to lock in your rate.
Economic Trends Affecting Mortgage Rates
After the Jobs report was released in August, the mortgage rate base went down .38%. Why? We’ve had excellent news: All the inflation reports are trending down, including the Fed’s favorite PCE report of 2.6%, moving the needle closer to 2% inflation. CPI inflation report down .04% to 2.5%. Inflation hasn’t been this low for 3.5 years. With unemployment at 4.2%, the economy shows signs of a struggle, signaling an interest rate cut in September.
How to Keep Up to Date⬇️
For daily updates: “Today’s Mortgage Rate: What’s Driving the Change.” ~ Also, compare what other mortgage lenders are changing for mortgage rates for the day.
- Home Mortgage Rates vs. Home Prices: Now is the time to create a plan. I will walk you through determining whether purchasing is better when prices are lower, mortgage rates are a little higher, and refinance later, or when mortgage rates are lower, and home prices are higher. You will then be able to calculate your monthly payment.
- Mortgage Payment Calculator Tools: I have two types of calculators. 1. How much of a home can you afford? 2. Mortgage Calculator for monthly payment
- Home Prices and Real Estate Trends: You can access the live graphs directly from the Multiple Listing Service. First, you can see county trends. Next, you can dive deeper into trends by City and Price Range. 🎉
- Request our Newsletter ~ Real Estate Insider, and have all the essential updates sent right to your 📩 inbox.
Step #1 ~ Cracking the Mortgage Rate Code
Step #1 ~ Track the 10-Year Treasury Yield ~ Your Base #
To navigate mortgage rates, you must understand that the Federal Reserve ( the Fed) doesn’t directly determine mortgage rates, while Wall Street does through the 10-year treasury bond and mortgage-backed securities. However, the Fed does move the Federal Funds Rate up or down in response to inflation, the economy, unemployment rates, and more. The Fed policy change does affect how the bond market and mortgage-back securities respond, influencing mortgage rates. Remember, mortgage rates are tied to Wall Street.
Step #2 ~ Crack the Mortgage Rate Code 💥Mortgage-backed Securities💥
💥This is the most critical piece of the puzzle💥, navigating mortgage rates in the future, up or down. I’ve dedicated an educational blog post to “Understanding Mortgage-backed Securities (MBS) Effects on Mortgage Rates” (start here).
Yield + MBS Gap Rate = Mortgage Rates
The MBS Gap Does Affect Mortgage Rates…Let’s See How😮
Knowing how mortgage-backed securities (MBS) and rates work is critical to saving money in Metro Detroit. Like the bond yield, securities are sold on Wall Street. The economy and Fed policies directly affect whether the trends increase or decrease. Every buyer is concerned about mortgage rates and wants to know where they are heading. Tracking the MBS Price Gap is how you find out. Soon, you’ll master the mortgage rate trends and know when it’s the right time to confidently purchase your new home.
The Fed was very conservative this past week regarding policy for Mortgage-backed Securities trading until Friday after the jobs report was released. The MBS Price gap decreased, helping the mortgage rate hit 6.27%.
Calculate the Gap
The graph uses teal to show the average 10-year Treasury Yield Rate average for the week and orange for the MBS gap rate average for the week. The mortgage rate is shown as a percentage on top. The graphs on the left shows “What If Scenario,” highlighting the importance of tracking the MBS Gap and its effect on your mortgage rate. Yield + MBS Gap Rate = Mortgage Rate. The 50 year average for gap rate was 1.72%. We need to have investors confident in the mortgage market and adding mortgage-backed securites to their portfolio. Increase in demnad will cause the gap rate to go down and mortgage rates. The graph on the right is the actual calculation for each day.
Scroll Through the Weekly Mortgage Rates vs. The What If💥Know the Rate Trends ~ drop of .11%💥
CLICK THE PICTURE TO ENLARGE THE BAR GRAPH
MBS Gap Trends
The 💥most crucial piece of the puzzle💥 regarding when mortgage rates will drop is the MBS Price Gap Rate.⤵️ Since March 2020, the MBS Gap average has been 2.75% vs. the 50-year low average of 172%. We’ve seen a steady stream downward over the past several weeks for the first time. We broke the 2.6% ceiling in mid-August, and the gap is in the 2.4**% range for the first time.
Step #3~ = Mortgage Rates ~ Crack the Mortgage Rate Code
Freddie Mac PMMs
Freddie Mac is the Fed underwriting system most banks use to replenish their cash. They will post a survey of loans that went through its underwriting system for the week starting on Thursday and ending on Wednesday. This survey doesn’t tell us the points the borrowers paid to get the lower rate, the average credit score, or the average downpayment.
When you hear the news headlines regarding mortgage rates, they quote the Freddie Mac survey. I don’t use this survey to predict where I think the rate will be heading next because the data is skewed due to not posting average points, credit scores, or down payments. That’s why I don’t use Freddie Mac to determine the Mortgage Rate Base.
Freddie Mac Pricing Stayed the same as last week.
Mortgage Daily News ~ SHOP & Compare Mortgage Rates
That’s why it’s important to understand mortgage rates to negotiate the best deal. Know your FICO score (free with Experian), not your credit score. Shop around, but don’t give out your SS# until you find a lender you want to work with.
Get a quote based on your criteria Monday – Friday. Start with Change Options and update the purchase price, zip code, down payment, and FICO score (free version on Experian), which differs from Credit Score. Next, if you’re not looking for a conventional mortgage (default), select more options for FHA, VA, and USDA loans.
Negotiate Your Fees and Points
Remember, your rate will be determined by the lender you choose and what they charge in points and fees. (Shop around, but don’t give out your social security number.) They will also use your FICO score (know your number) and your downpayment. To explore other lender options and compare mortgage rates, I’ve provided information on what various lenders are changing. Scroll through and view the differences and options as examples. You can also visit Mortgage Daily News and do your calculations. Scroll down and fill out the form.
Mortgage Daily News Best for Tracking Base Rates
September Mortgage Rate Trends
Month End For August 2024
Understanding and Negotiating Mortgage Rates Let’s Connect ⤵️
Boy, that’s a lot to pack in.🤩 Ready to explore your options to find the right mortgage rates and terms for you in Metro Detroit? Let’s schedule a Zoom call, and we’ll review options so you understand your purchasing power. That includes your rate, property taxes, payment mortgage insurance for loans under 20% down, and homeowners insurance, which will all affect your monthly mortgage payment. We’ll also cover any other questions or concerns you may have. I’ll share my screen to give you a clear view of the market insights and help you make informed decisions. Schedule your appointment today.⤵️
For More Tips Scroll Down⤵️
Lots of Important Headlines ~ Economic Trends Will Affect Mortgage Rates ~ 👀
Economic Trends that Affect Mortgage Rates
What My Crystal Ball 🔮 is Telling Me Regarding Future Mortgage Rates
Mortgage Rates have moved down to a new range for next week: 6.1* Range. That will continue at the beginning of the week, and there is a good chance Wall Street is confident that the Fed will lower interest rates by 50 basis points. The best day to lock rates next week will be September 19th, after the Fed announces interest rate cuts and policy changes. This new shift will slightly impact mortgage rates and your monthly payment next week.
When Will Mortgage Rates Go Down in Metro Detroit?
We know the next Fed meeting is September 17th and 18th. The Fed feels warm and fuzzy about the policies cooling inflation. At least Powell stated that a September interest rate cut would be on the table. The key here is whether it will be 25 or 50 basis points. The unemployment rate went down, but some other statistics are causing worry about the Fed Policy coming up.
Job creation is at a three-and-a-half-year low, and manufacturing also decreased. The “R” word is flashing red again. (Recession) Wall Street shifted its prediction from 14% to 50%, a 50 basis point mortgage rate cut. My gut is telling me we will see a 50 basis point cut only if the Fed wants to get ahead of the curve. They missed the boat last time; let’s see what they do on the 18th.
Dates to Watch for Future Interest Rate Cuts
Metro Detroit Neighbors, I’ve had a close👀on the trends for years, and now you can too.
- CPI Inflation Report: 9-11 ~ 10-10 ~ 11-13 & 12-11
- The Fed Meeting September 17-18
- PCE Report Septmeber 27th
- 💥Jobs Report October 4th (First Friday of the Month)
If you are waiting for the mortgage rate base to be under 6% to buy your new home in Metro Detroit, there is a fighting chance that could happen starting the 3rd week of September. Remember, Yield + Gap = Mortgage rates ~ See You next Sunday the 22nd🤩
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