Our clients keep asking: when do we expect interest rates to come down? Our response has been to remind our clients of the Fed’s mission: to ensure stability in the nation's monetary system to promote optimal macroeconomic performance. In more practical terms: keep inflation in check and foster a strong job market, primarily characterized by low unemployment. As long as inflation remains high and unemployment remains low, we can expect no reprieve from these higher interest rates.
And, so, it has been almost a year since our last interest rate update. The interest rate environment has remained stable, albeit stubbornly high, driven by strong a job market and persistent inflation. That is, until earlier this week. Hence, we bring you today’s update.
The Bureau of Labor Statistics reported last week that the national unemployment rate rose in July 2024 to 4.3%, the first time above 4% since January 2022, and up from 3.7% since the start of the year. Meanwhile, the U.S. CPI was down to 3% in June 2024 and 0.5% over the prior 3 months. On Monday, the S&P fell 3%, the Nasdaq tumbled 3.4%, and the Dow slipped 2.6% over recession fears. It was the worst one-day drop in about 2 years.
On Monday, as the markets were falling, Chair Jerome Powell indicated that the Federal Reserve is becoming more convinced that inflation is headed back to its 2% target and said the Fed would cut rates before the pace of price increases actually reaches that point, the AP reports. The market is now pricing in a 0.25%-0.50% rate cut in the upcoming FOMC meetings in September.
The yield on the US 10 Yr fell to 3.78% on Monday, approximately 100 basis points lower than 3 months ago, although it has since rebounded some, now hovering around 4%. The average rate on the popular 30-year fixed rate mortgage is down to 6.52%, 31 basis points lower compared to this time last week. HUD commercial interest rates have come down as well, but the market remains volatile. Check out today’s rates.
HUD Commercial Loan Rate Update – August 8, 2024
- 35-year fixed FHA perm loans: 5.25%-5.65%
- 40-year fixed FHA construction/perm loans: 5.75%-6.15%
These pricing indications are current as of the date posted, subject to market interest rate volatility. Pricing of FHA insured apartment and healthcare loans may be dependent on loan size and other risk factors. Call for more information.
Interested in learning more about FHA's attractive loan programs?
Click to learn more!
