Navigating Mortgage Rates: Empower Your Move Now 🤯

Navigating mortgage rates in Metro Detroit might seem daunting, but fear not! I’m here to simplify it for you. Whether buying or selling, let’s embark on this journey together and ensure you get the best deal possibleN

Navigating Mortgage Rates Today in Metro Detroit | Team Tag It Sold

Navigating Mortgage Rates in Metro Detroit ~ Where Are They Heading Next Week. 

Hello, Metro Detroit neighbors; I’m switching up this page. We’ve been on another roller coaster ride with mortgage rates in April; they skyrocketed up, and now, in May, we are into a slow, steady decline. Mortgage Rate Education is broken down into three categories. This blog post, “Navigating Mortgage Rates,” will provide weekly updates. We’ll review the trends for the week and upcoming news to determine where mortgage rates could be heading next week. For daily updates, visit “Today’s Mortgage Rate: What’s Driving the Change.”   To review graphs and to calculate your principal and interest payments, visit “How Mortgage Rates Impact Your Monthly Payment.”  To review all blog posts regarding mortgage rates, Mortgage Category   Let’s get started 🤩🥳

Mortgage Rate Formula

Mortgage Rate Calculation for Metro Deroit | Team Tag It SoldWe

Mortgage Rate Trends & Predictions... For Next Week

💥Important 💥Track the 10-Year Treasury Yield

To navigate mortgage rates, you must understand that The Federal Reserve (Fed) doesn’t directly determine them. However, the Fed does move the Federal Funds Rate up or down in response to inflation, the economy, employment rates, and more. This affects how the bond market and mortgage-back securities respond, influencing mortgage rates. 

10-Year Yield Rates for April 29 – May 3

I am glad April is behind us, I’m sure you are to Metro Detroit. Before you lock your rates, make sure you know the daily trends. Those who followed my blog post knew not to lock rates on April 30. Investors jumped the gun, thinking the Fed would increase interest rates. Wall Street lost their minds, and mortgage rates jumped to 7.51% due to the yield rising to 4.665%. By May 1 until 2:00, after the Fed chair announced they wouldn’t increase interest rates, Wall Street realized the sky was not falling. By Friday, the yield dropped to 4.514%, and mortgage rates followed. Next hold date will be May 1th.  Scroll and review the yield trends for the past five days. It’s essential to track the yield.

Scroll for Yield #’s
Remember Yield + MBS Gap = Mortgage Rate.

CLICK PICTURE TO ENLARGE

Step #2  ~ 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). 

Weekly Yield +  MBS Gap Rate = Mortgage Rates 

The MBS Gap Does Affect Mortgage Rates…See How😮

Knowing how mortgage-backed securities (MBS) and mortgage 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 have a direct effect on whether the trends will go up or down. Every buyer is concerned about mortgage rates and wants to know where they are heading. This is how you find out. Soon, you’ll master knowing exactly when to buy your new home confidently. 

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 and right sides show “What If Scenarios,” 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.

Scroll Through the Weekly “What If the Gap Rate Goes Down”
Click Picture to enlarge
MBS  Gap Trends 

The first goal for the mortgage rate to shift down is for the gap to break 2.7%. We want to see the weekly average trend down week over week. As the graph above shows, even if the 10-year treasury yield stays high, if investors start investing again in Mortgage-backed securities, the mortgage rate will go down. 

CLICK PICTURE TO ENLARGE

Final Step = Mortgage Rates ~ We’ll review mortgage rates trends in two ways

 Freddie Mac PMMs 

 Freddie Mac posted a survey of loans that went through its underwriting system on Thursday. This survey doesn’t tell us the points the borrower paid to get the lower rate, the average credit score, and the average downpayment. That’s why it’s important to understand mortgage rates to negotiate the best deal with your lender. When you hear the news headlines, 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, but it will give you a range of how low your mortgage rate could be. 

Negotiate Your Fees and Points

Remember, your rate will be determined by the lender you choose and what they will 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 to compare mortgage rates, click here. 

2. Mortgage News Daily ~ Mortgage Rates Best for Tacking Base  Rate Trends
I’m using this Mortgage Daily News platform to Navigate mortgage rates, as it depicts a more accurate picture of rates before the underwriting system calculates your credit score, downpayment, and the points you pay to determine your mortgage rate. The lower the credit score and downpayment, the higher the mortgage rate. This is my go-to platform to track numbers and trends. Based on the Freddie Mac Mortgage survey for the week and the average from Mortgage Daily News, it will give you a range to work with the lender to negotiate rates. To keep up to date daily, visit “Today’s Morgage Rates ~ What’s Driving the Change.”
 
Daily Mortgage Rates for the Month 5-10-2024 | Team Tag It Sold for Metro Detroit
CLICK PICTURE TO ENLARGE

Lots of Important Headlines ~ Economic Trends Could Affect Mortgage Rates ~ 👀

I track the headlines every day. It provides a glimpse of how the economy will affect Mortgage Rates for the day. Remember, mortgage rates are tied to Wall Street through bonds and securities. Mortgage rates will increase if investors read the tea leaves wrong and retract. There is a lot of noise right now, and you can cut through it if you track the numbers. The Fed has pushed back on the first interest rate cut from June; now, the next possible date is September. We are now seeing a shift in the economy. May’s numbers will be an essential clue to when we’ll see a shift in mortgage rates. Yes, you can predict where mortgage rates are heading next, and I’ll show you how 🤩
 

You Must Track the Economic Trends to Know Where Rates are Heading 

Have you noticed that mortgage rates are climbing again in Metro Detroit? Let’s break it down. It’s all about the Economy and Inflation. 

Big Takeaway On Inflation and Mortgage Rates

Let’s review what will affect inflation—starting with manufacturing. Manufacturing scaled back its purchasing activities due to declining orders. On 4-25-2024, the GDP numbers came in weaker at 1.6%, and unemployment went up to 3.9%. So now we are waiting for Inflation trends. Based on early numbers, they should be lower than the 2024 high of 3.5%. We’ll find out on the 15th. 

Release Dates to Watch For
  • Manufacturing ~ June 3rd (the first business day of the month)
  • Unemployment ~ June 7th ( First Friday of the Month)
  • PCE ~ May 31st ~ Quarter and Yearly trends with GDP Data
  • GDP ~ May 30th 
  • Inflation ~ May 15th
Source: Trading Times Economics on Manufactoring PMI #’s
Manufactoring Trends for May 2024 | Team Tag It Sold for Metro Detroit
Source: Trading Times Unemployment Rate #’s
Unemployment Trend for 5-3-2024 | Team Tag It Sold for Metro Detroit
PCE ~ Personal Consumption in the prices of goods and services. 
PCE-Graph-for-April | Team Tag It Sold for metro Detroit
Fed  Chair Jerome Powell Meeting 4-30 caused mortgage rates to drop. 

Wall Street jumped the gun in April after the inflation report showed inflation jumped to 3.5%. They were braced for an interest rate increase. That assumption caused the yield to skyrocket 🚀and the retraction of investment in mortgage-backed, causing the gap to increase as well. 📈 Fast forward to May 1st. Surprise, the Fed didn’t raise interest rates, and the game plan until the next meeting is to hold a little longer and see if the current policies will cool down inflation. Once that announcement was made, the 10-year treasury yield slowly trended down, and we saw a positive buy-in of mortgage-backed securities, which also brought that trend down. That’s why mortgage rates shifted from a high of 7.52%  on April 25 to 7.28%. 

Tracking the Inflation Numbers

 In March, the Wholesale inflation numbers came in hot at .06%. This was the start of Wall Street’s retraction, and yield jumped from 4.325% on April 1 to as high as 4.71%, causing a mortgage rate high for April at 7.52%. All these numbers affect Inflation, Which affects mortgage rates. 

Inflation Line Graph for March 2024 | Team Tag It Sold for Metro Detroit

 

What My Crystal Ball 🔮 is Telling Me for Next Week in Metro Detroit ~ Rates will trend down.

We know that economic trends and inflation affect our mortgage rates in Metro Detroit. So, what will next week bring? It was quiet after the Fed announced they would not raise interest rates, and we saw mortgage rates decline. Wednesday morning is going to be a big day. It could be another roller-coaster day, depending on how high inflation numbers come in and how Wall Street reacts to the news. The last release of the inflation report showed inflation up to 3.5%, the yield skyrocketed🚀 up, and mortgage rates followed. The average for the past 30 days was 7.4+. Remember, Wall Street will determine mortgage rates. The Wall Street Fear and Greed Index has been in Fear mode for nineteen days. That means investors will be highly cautious. 

Next Week Prediction

Our next lock-in hold day for your mortgage rate will be May 15th until midday. We’ll need to review the inflation numbers at 8:30 am and the effect on the 10-year treasury yield rate. We’ll start next week off at the 7.19% range and be optimistic they will continue to trend down for the rest of the week. We await how extreme Wall Street will react to the economic headlines on Wednesday. 

We need an Economic Pivot.

For the Fed to lower interest rates, we need a weaker economy. What does that mean for mortgage rates? A cooler jobs market and an increase in unemployment. Consumers spend less and decrease retail numbers. If the prices are high, leave them on the shelf and buy only the necessities. If the economy weakens, the Fed will start lowering interest rates and changing policies. That shift will affect the bonds and securities market as investors add safe investments to their portfolios. Then mortgage rates will go down. 🥴

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Pam Sawyyer @ Metro Detroit Home Experts

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