Tomo Mortgage Rate Monitor

Rates stay flat at 7%

Updated: May 10, 2024

As anticipated, no major economic data was released this past week and mortgage rates stayed the same. We expected this past week to be uneventful, with bond trading dominated by regular flows as opposed to event-driven repricing of interest rate expectations.

On Wednesday, there will be a major release – the Consumer Price Index (CPI). All eyes will be to see if and when the weaker than expected labor market report affects consumer spending and inflation. CPI has been higher than predicted for the past 3 months.

Impact on Homebuyers

Rates holding at 7% week-over-week, from a beginning of the year high of 7.875%, will save the typical home buyer $202 per month and nearly $78,000 over the course of a 30 year loan term.

Another way to look at this: A typical buyer will be able to spend almost 7% more on a house, or roughly $24,000, and have the same monthly payment. This assumes a home purchased at $400,000 with 8% down and 740 credit.

Rate Prediction

Our Tomo Mortgage 30yr fixed conforming mortgage rate forecast for the end of year 2024 is 6.5%. We revised our Q2-Q4 estimates upwards due to the recent outperformance of key labor and inflation metrics, but are overall projecting a steeper decline in interest rates than the market. We are predicting a first Fed cut in September with three total cuts in 2024. The labor market is showing signs of weakening, and inflation and consumer spending will soon follow. As a result, that will bring rates lower.

Quarter	Prediction	Actual
Q1 2024	6.875%	6.875%
Q2 2024	6.625%
Q3 2024	6.5%
Q4 2024	6.5%

Current Rates

You can see personalized rates on our current mortgage rates page (we promise they are real rates for real people).

Product	Rate – May 10	Rate – May 3	Change
30 Year Fixed	7.0%	7.0%	no change
30 Year Fixed – VA	6.25%	6.25%	no change
30 Year Fixed – FHA	6.375%	6.375%	no change
30 Year 7/6 ARM	7.625%	7.625%	no change
15 Year Fixed	6.375%	6.375%	no change

Economic Events

April Producer Price Index (PPI) (Tue – 8:30 am) This is a measure of inflation felt by businesses and producers of goods and services. The Fed focuses on consumer inflation, and producer price inflation has an indirect relationship to consumer inflation. That said, as the market is inflation-sensitive, this is a potential major release.

April Consumer Price Index (CPI) (Wed – 8:30 am) This is a major measure of consumer inflation and the first inflation data released for the month of April. Core CPI, which excludes food and fuel, is expected to be at .3%, down from .4%. This measure has been higher than expected for most of the year.

April Core Retail Sales (Wed – 8:30 am) Core Retail Sales measures the change in the total value of sales at the retail level in the U.S., excluding automobiles. It is an important indicator of consumer spending and in indicator of consumer health. A lower than expected reading would be a positive for mortgage markets.

Next: Calculate Personalized Rates