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 possible.

Navigating Mortgage Rates in Metro Detroit for the Week Ending 4-19-2024

Hello Metro Detroit neighbors! I’m switching up this page. We are now on another roller coaster ride with mortgage rates, and they are on their way up… again. Mortgage Rate Education is broken down into three categories. This blog post, “Navigating Mortgage Rates,” will update you with weekly average trends and future rate predictions for the Week. “Understanding Mortgage Rates”⤵️ is the back story to understand, track, and start your journey to forecasts. The new category “Today’s Mortgage Rate: What’s Driving the Change.” is your daily trends. If it is easier, bookmark the Mortgage Category to keep up with all the updates regarding Mortgages.

Mortgage Rate Formula

Remember, the 10-year Yield rate + MBS gap rate (if investors purchase Mortgage-backed securities in positive or negative territory) will determine the mortgage rate. On this page, I’m looking for the mortgage rate trends this Week for clues on mortgage rate predictions for next Week.

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 Rate for April.

😓 As far as a drop in mortgage rates, we are on hold. With no interest rate cuts this spring, it may be as late as September; the news impacts mortgage rates. The Fed Chair stated it might not be this year at all, and the Yield skyrocketed.🚀 The Yield has been up all month, pressing mortgage rates base to rise as high as 7.5%. The first goal is to have the yield break be 4.0%, which will not happen until we see significant economic changes.

Scroll for April’s Yield #’s ~ Yield Rates Skyrocketed🚀

Remember Yield + MBS Gap = Mortgage Rate.

CLICK PICTURE TO ENLARGE

Freddie Mac Survey (PMMS) 3-8–2024

Let’s Delve into the World of Mortgage Rates ~ Measured in Two Ways.

Freddie Mac’s Primary Mortgage Market Survey (PMMS) is based on the mortgage rate collected from thousands of loan applicants submitted to Freddie Mac from lenders across the county when a borrower applies for a mortgage.

1. Freddie Mac Survey (PMMS) This is a Survey

This survey also 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 your 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. Remember, your rate will be determined by what your lender will charge in points (shop around and don’t give out your social security number), your FICO score (know your number), and your downpayment. February 1st rate was 6.63% and slowly went up throughout the month. March started with a slight decline of 6.88%, and now the base mortgage rate is back to 7.4+%.

Track the Weekly Average Survey ~ Freddie Mac PMMS.

CLICK PICTURE TO ENLARGE

2. Mortgage News Daily ~ Mortgage Rates Best for Tacking Trends

I’m using this Mortgage Daily News platform for Navigating 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 actual 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, the base for mortgage rates moving into next week is up over 7.4%. To keep up to date daily, visit “Today’s Morgage Rates ~ What’s Driving the Change.”

Mortgage Daily News ~ 30-year Fixed Weekly Rate for April Mortgage Rate has a live feed from Mortgage Daily News that is updated daily.

Now, the Last Piece of the Puzzle ~ the Securities & the Gap Rate

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). This week’s Yield ~ MBS Gap = daily mortgage rates. Click the picture to enlarge the graph. Mortgage rates finished the week lower due to the positive news regarding the Fed’s interest rate policies.

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. Soon, you’ll master this, 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.

Gap Graph Breakdown

Your base is the 10-year Yield average for the week at 4.262%. The left graph shows a gap at the 52-year average of 1.72%, making the What If mortgage rate 5.98%. On the right, since March 2022, our MBS gap average was 2.705%, adding to the Yield of 4.262%. The What If mortgage rate would be 6.96%/ That’s our benchmark for predicting whether mortgage rates will likely decrease over the long term. The middle graph shows the average Yield minus the average mortgage rate, which equals the average gap rate. According to the graph, the average mortgage rate was 7.12%, down from the 7.13% average for last week.

Scroll Through the Weekly “What If the Gap Rate Goes Down”

CLICK PICTURE TO ENLARGE

Lots of Important Headlines For Today ~ 👀

I track the headlines every day. It provides a glimpse of how the economy will affect Mortgage Rates. 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 and now pushed it back to maybe 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 🤩

Are Higher Rates now fueling higher inflation
Three Signs US Could Be Heading for a Recession

Why Did Mortgage Rates Go Up Over 7%?

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

So now we are back to supply and demand in the bond market and securities. At this point, we are chasing our tail, Metro Detroit. 👿 Investors need to chew on the numbers that were released this month. The Manufacturing Report is out and growing steadily in 21 Months. February added more jobs than was speculated at 275,000, but the unemployment rate is 3.9%. The Economy is still strong. People have jobs, and the cost of living is rising, and we’re still spending money despite higher prices. Stock Market is hot, and investors are making money. The 10-year Treasury Yield increased to the 4.3% range from 4.094 on 3-11-2024.

Fed Chair Jerome Powell Meeting

Jerome Powell recently shared insights when he was on Capital Hill updating Congress. We’ll review how interest rates impact the real estate market, especially regarding bonds, securities, and commercial loans. The takeaway? Businesses are facing challenges in securing loans, leading to more commercial defaults. This situation underscores the broader economic strategies to manage inflation without tipping into a recession. Suppose businesses and wholesalers have to pay more to borrow money that gets passed on to us. The Fed Chair missed the boat in raising the interest rates; I hope he doesn’t make the same mistake and wait too long to lower them. The increased interest rates seem to be making it worse, not better. We are on June watch for Interest Rate cuts. What do you think, Metro Detroit?

Tracking the Inflation Numbers

Based on watching the Fed Chair, we are tracking inflation numbers to predict when we might see a Fed Rate Cut. Inflation numbers are in, and there was a slight tick-up by 1%. What caused the increase? Home and auto insurance, gas at the pump at the pump, and home rentals were up. Buyers aren’t buying like they were, so rental demand is up, causing the prices to go up, too. No interest rate cuts are going to bring down gas or insurance prices. Core inflation was down by 1%. The good news is that the prices of core inflation (food & energy) dropped from 3.9% to 3.8%. Wholesale inflation numbers came in hot at .06%.

What My Crystal Ball 🔮 is Telling Me for Next week in Metro Detroit

Let’s start with inflation; unemployment, consumer spending, and retail sales are all moving in the wrong direction, keeping the economy strong 👿 We know the high inflation rate of 3.5% caused the 10-year treasury yield to skyrocket, impacting Mortgage Rates in Metro Detroit. The Mortgage Rate trend will exceed 7.3% until the Fed meeting on 4-30. I don’t see much change until then. Investors are not jumping in on mortgage-backed Securities or bonds. The first chance I will see where mortgage rate trends will go down will be after the unemployment numbers are released on May 1st, along with manufacturing. The Fed meeting is on the 30th, and I think it will be more of the same. The Fed will not be cutting interest rates until there is a downward trend in inflation. Plan on mortgage rates to settle in the 7.4% range, plus or minus .025% for next week.

MBS Gap Update

The economy is resilient, and consumers keep spending. Unfortunately, we will not see mortgage rates drop in Metro Detroit until the economy shifts. Now, the Fed has September on their radar for the first rate cut. We must see an average MBS trend to decline under 2.7% to get mortgage rates to stabilize under 7%. Wall Street had a bad week all the way around, including Securities. I will review all the data for the following week’s predictions regarding rates by Sunday at 6:00 pm; please visit ~ ‘Navigating Mortgage Rates Empower Your Move” for an update.

I agree with the economist.

Based on the numbers, the Fed needs to consider lowering interest rates. Keeping them this high won’t bring down gas at the pump, home rental prices, car and homeowners insurance, or the cost of doing business; lowering the interest rate will. JP Mortgage wrote an article on 4-9-2024, ” Are High-Interest Rates Now Fueling Inflation?” I fear the Fed stubbornly holds on to the 2% Inflation rate. Watching the numbers and core inflation, is the Fed starting to fuel inflation? I don’t see the Fed raising interest rates to tackle inflation; that would spiral the economy into a recession. So, we are in a waiting game, and for now, there will be no relief from the high mortgage rates until we see a shift in the yield and securities market.

We need an Economic Pivot.

For the Fed to lower interest rates, we need a weaker economy. That means increased unemployment, less consumer spending, and investors fearing the stock market and shifting to safer investments like bonds and securities. Based on what I see, mortgage rates will be over 7% until about May 15th, when economy numbers are posted.

Wall Street Index Today

Today’s Fear & Greed Index is 40, which is eight days in a row in fear territory. Investors are chewing on the data, knowing there will be no interest rate cuts in June and that the new target date is September. The consistent fear index territory will have investors rethinking their investments and will consider more secure assets like bonds and securities. That would be great news for mortgage rates. It sounds wild, but if investors are worried about making money in stocks, they will shift to safer investments, such as bonds and securities. I like what I see; it is better for us in the Fear Index than the Greed Ind x. The Fed will watch the economic trends closely while watching inflation numbers and trying not to trigger a recession.

Moving the Baseline ⬆️ Today

I’m moving the Baseline up from 7% to 7.4%, and mortgage rates should fall between Plus and Minus 0.25% once the market calms down. Future Projections: to review the weekly trends, visit Navigating Mortgage Rates ~ Empower Your Move, updated Sunday by 6 pm. I’m reviewing my notes to find trigger data for a 2000 & 2007 recession. I know high unemployment triggered the Great Recession, but I want to review the numbers leading up to that point. Yes, I was running the numbers back then, too. 🤣 During the last housing boom 2000, my buyer’s mortgages averaged 8.75% in Metro Detroit.😨 Feel better😍

Important Future Dates to Watch & How They Will be Impacting Mortgage Rates

Next are May’s economic numbers: the Fed meeting on April 30th, the jobs report on May 1st, May 3rd manufacturing numbers, and May 15th inflation. We don’t like the higher cost, but that hasn’t stopped us from spending. Wages have increased, and consumers have jobs; they won’t lower interest rates. The spring market will be more similar with higher Mortgage Rates and not the 6.5% that economists predicted in January. Remember, Yield + Gap = Mortgage Rates. See You Tomarrow🤩