Market Update - December 13, 2024

Friday, December 13, 2024

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. Polly data is calculated using actual locked rates. Rates are inclusive of locks that occur below par, at par and therefore consider discounts, points, and rebates. *Rates are based on a scenario with a 780 Credit Score, <60% LTV, Purchase transaction. As of 12/12/2024 – 12:00 PM EST.*

A chart titled 'A Quick Look Back,' summarizing key economic events from December 6 to December 12, 2024. The table includes Event Date, Event Name, Actual Data, Forecast, Previous Data, and Commentary. On December 6, the Non-Farm Payrolls report shows the U.S. economy added 227,000 jobs in November, significantly above the forecasted 200,000 and a sharp rebound from October’s upwardly revised 36,000, which was impacted by Boeing strikes and hurricanes. Employment gains were strongest in health care (+54,000), leisure and hospitality (+53,000), government (+33,000), and social assistance (+19,000). Also on December 6, the Unemployment Rate for November stood at 4.2%, meeting expectations but marking an increase from October’s 4.1%, representing the sixth consecutive month of unemployment above 4%. On December 11, the Core CPI for November increased 0.3% month-over-month, matching market expectations and holding steady at an annual rate of 3.3% for the third consecutive month, indicating consistent inflation excluding food and energy. Also on December 11, the Federal Budget for November recorded a $367 billion deficit, larger than the forecast of $353 billion and up from October’s $257 billion. This 17% year-over-year increase was driven by calendar adjustments boosting benefit payment outlays by $80 billion compared to November 2023. Finally, on December 12, initial jobless claims for the week ending December 7 rose to 242,000, above the forecasted 220,000 and up from the prior week’s 224,000, reflecting a moderate uptick in layoffs.

Market Commentary

Interest rates fell slightly for the week of December 6^th -December 12^th . The highly anticipated Consumer Price Index came out this morning and it showed the annualized rate of inflation grew for the second straight month, inching up to 2.7% in November from 2.6% in October while sitting below 3.1% from the year prior. Although the pace followed a general downtrend in 2024, the recent upticks won’t help the Fed’s case to cut rates next week. Alongside the monthly jobs report, CPI data holds the most influence over interest rates. The monthly increase will add upward pressure on mortgage rates.

“The 30-year fixed-rate mortgage decreased for the third consecutive week,” said Sam Khater, Freddie Mac’s Chief Economist. “The combination of mortgage rate declines, firm consumer income growth and a bullish stock market have increased homebuyer demand in recent weeks.

Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 12/12/2024 – 12:30 PM EST):

Market Review: Optimal Blue's Production Metrics:

Productivity Performance

While wage growth declined from 5.9%/year during 5/22 to 3.6%/year in 7/24, it’s since risen to 4%/year. While growth this high isn’t generally conducive to 2% inflation, a doubling of productivity growth to 2% makes it possible. The rise is the result of firms investing in machines as wages rose and employees were hard to find during Covid, as well as massive pandemic-induced job shuffling/switching that raised wages and productivity. - Elliot Eisenberg, Ph.D. , Economist

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Interest rate and annual percentage rate (APR) are based on current market conditions as of 12/12/2024, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 12/12/2024 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

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