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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.

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Interest rates to remain high. That was the takeaway from Fed Chair Jerome Powell's address to central bankers at the annual Jackson Hole Symposium earlier today. "We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective," said Powell. The market is now anticipating at least one more rate hike before the end of the year, and no rate cuts until 2024.

The average rate on the popular 30-year fixed mortgage is up to 7.57%. The yield on the US 10 Yr is now hovering around 4.25%, up approximately 275 basis points since the start of 2022. HUD commercial interest rates are hovering in the 5.70%-6.70% range over the past 3 months.  Check out today’s rates.

HUD Commercial Loan Rate Update – August 25, 2023

• 35-year fixed FHA perm loans: 5.95%-6.25%
• 40-year fixed FHA construction/perm loans: 6.40%-6.70%

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.

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Inflation remains stubbornly high. The U.S. CPI was up 0.5% in January 2023 and 6.4% over the previous 12-month period. "The latest economic data have come in stronger than expected, which suggested that the ultimate level of interest rates is likely to be higher than previously anticipated," said Fed Chair Jerome Powell in his address to the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill earlier this week. The market is now pricing in a 0.50% rate hike in the upcoming FOMC meetings later this month.

The average rate on the popular 30-year fixed mortgage is up to 6.875%. The yield on the US 10 Yr is now hovering around 3.95%, approximately 200 basis points higher than 12 months ago. HUD commercial interest rates have settled in the 5.00%-6.00% range over the past 3 months.  Check out today’s rates.

HUD Commercial Loan Rate Update – March 9, 2023

• 35-year fixed FHA perm loans: 5.20%-5.50%
• 40-year fixed FHA construction/perm loans: 5.70%-6.00%

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.

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The Fed continued to act to combat persistently high inflation. The Fed voted today to raise the primary credit rate by 0.75% to 3.25%. Also, the Fed voted to reduce its holdings of Treasury securities and agency mortgage-backed securities to approximately $60 billion and $35 billion, respectively. This follows six months of sustained U.S. inflation rate coming in north of 8%. The Fed’s actions were consistent with its announcements at prior meetings and market expectations. The Fed’s official press release is available here.

The combination of inflation concerns and the Fed’s response of short-term interest rate hikes and reducing its balance sheet holdings has fueled a rapid increase interest rates. The average rate on the popular 30-year fixed mortgage is up to 6.25%, the highest since 2008, according to the MBA. The yield on the US 10 Yr is now hovering around 3.50%, approximately 200 basis points higher since the start of the year. HUD commercial interest rates have continued to climb,  approaching 5% and higher. Check out today’s rates.

HUD Commercial Loan Rate Update – September 21, 2022

• 35-year fixed FHA perm loans: 4.85%-5.10%
• 40-year fixed FHA construction/perm loans: 5.30%-5.65%

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.

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With U.S. inflation surging to a new four-decade high of 8.5% in March, the Fed at its March meeting raised the federal funds rate by 25 basis points, the first such rate hike since the end of 2018, and signaled 6 forthcoming rate increases in 2022. The Fed also released a statement stating that it expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.

The combination of Fed’s short-term interest rate hikes and ending its purchases of long-term debt has sent interest rates soaring. The average rate on the popular 30-year fixed mortgage is now above 5%. The yield on the US 10 Yr is now hovering around 2.90%, up approximately 90 basis points over the past 8 weeks since our prior update. Over the same period, HUD commercial interest rates have climbed 30 basis points and are up approximately 80-90 basis points on the year. Check out today’s rates.

HUD Commercial Loan Rate Update – April 19, 2022

• 35-year fixed FHA perm loans: 3.75%-4.00%
• 40-year fixed FHA construction/perm loans: 4.30%-4.65%

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.

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Interest rates soared on last week’s surprisingly strong jobs report and surging inflation. The Labor Department reported an increase in nonfarm payroll in January of 467,000 jobs, well above Wall Street’s 150,000 estimate. December’s jobs numbers were also revised up, from an initial reported gain of 199,000 to a revised 510,000 new jobs. The Labor Department further reported that the Consumer Price Index for January 2022 is up 7.5% compared to January 2021. This is up from the 7.0% increase reported in December and the highest inflation rate since 1982. A rate hike is expected at the Fed’s March meeting, with forecasts ranging from a 25 to 50 basis points.

Following the news, the yield on the US 10 Yr topped two percent for the first time since June 2019. The yield on the US 10 Yr is now hovering around 2.00%, up approximately 20 basis points over the past two weeks since our last update. Over the same period, HUD interest rates have climbed 30 basis points and is up approximately 50-60 basis points on the year. Check out today’s rates.

HUD Commercial Loan Rate Update – February 14, 2022

• 35-year fixed FHA perm loans: 2.95%-3.15%
• 40-year fixed FHA construction/perm loans: 3.50%-3.70%

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.

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Interested in learning more about FHA's attractive loan programs?
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The Bureau of Labor Statistics reported in January that the Consumer Price Index (for all items) increased 7% for the 12 months ended December 2021, the highest inflation rate since 1982. In response, the Fed announced plans to raise rates at the Fed’s upcoming March 15 meeting. Some Wall Street analysts now predict four or more rate hikes this year to combat inflation.

At the same time, the Fed is dialing back its bond buying, announcing plans to purchase just $40 billion in this monthly round. This is down from $120 billion a month pre-November 2021. The dual threat of short-term interest rate hikes combined with the Fed tapering has pushed interest rates up. The yield on the US 10 Yr has climbed 35 basis points since year-end before coming back down recently, closing at 1.79% yesterday.

Despite the writing on the wall, interest rates on FHA commercial loans held steady through much of the latter half of 2021. However, these latest developments are finally making a dent in the HUD interest rate market. Rates have now climbed approximately 20-30 basis points since our last update in June. Check out today’s rates.

HUD Commercial Loan Rate Update – February 1, 2022

• 35-year fixed FHA perm loans: 2.65%-2.85%
• 40-year fixed FHA construction/perm loans: 3.20%-3.40% 

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.

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Interested in learning more about FHA's attractive loan programs?
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Inflation concerns are accelerating the Fed’s timetable for short-term interest rate hikes. After setting expectations of no interest rate hikes until 2024 in March, the Fed is now estimating two interest rate hikes in 2023. The reopening of the U.S. economy following massive fiscal stimulus, an extended period of low interest rates, and the Fed’s bond purchases on the open market in response to the COVID-19 pandemic has fueled a surge in inflation. The CPI index rose at an annual rate of 5% in May, the highest increase since August 2008. The Fed now expects inflation to rise 3.4% this year, well above the Fed’s 2.4% prediction in March. Notwithstanding, the Fed will continue with its $120 billion monthly bond purchases, although tapering discussions are not too far off.

The yield on the US 10 Yr moved up following the Fed’s update, closing at 1.57% yesterday. The Fed’s continued asset purchases should hold interest rate levels down. For how long remains to be seen.

Interest rates on FHA commercial loans are relatively stable since our last update in March. Check out today’s rates.

FHA Commercial Loan Rate Update – June 17, 2021

• 35-year fixed FHA perm loans: 2.45%-2.65%
• 40-year fixed FHA construction/perm loans: 3.00%-3.25% 

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.

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Interest rates continued to climb this morning following President Biden's signing of the American Rescue Plan yesterday. The massive $1.9 trillion COVID-19 economic relief package combined with the expanding vaccine rollout and declining new cases in the U.S. has brought optimism on the economic front. Massive fiscal stimulus passed along with pent up demand associated with the pandemic – which just marked its one-year anniversary in the U.S. – is spurring talks of inflation. Indeed, Fed Chairman Powell said that he expects some inflationary pressures as the economy reopens.

Interest rates were anticipated to stay at historic low levels so long as the pandemic continued to run rampant, but the vaccine rollout and its high effectiveness has brought a sense of calm. The nation’s mood has shifted: there’s light ahead, the worst is behind us, and we’re seeing that now play out in the markets. The yield on The US 10 Yr is now up approximately 70 basis points over the past 2 months and at its highest level in more than a year. It would be even higher if not for the Fed’s ongoing commitment to keep buying bonds until the economy fully recovers.

Interest rates on FHA commercial loans are significantly higher since our last update in late December. Expect some interest rate volatility as the economy begins to reopen. Check out today’s rates.

FHA Commercial Loan Rate Update – March 12, 2021

• 35-year fixed FHA perm loans: 2.50%-2.75%
• 40-year fixed FHA construction/perm loans: 3.20%-3.45% 

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.

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Interested in learning more about FHA's attractive 223(f) refinance loan program?
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The COVID-19 pandemic continues to be the chief impetus behind this steady low interest rate environment. Not even a $900 billion COVID-19 relief aid bill passed by Congress late Monday is making a dent. News earlier this week of a more contagious virus strain coming out of the U.K. had investors seeking safer Treasury assets pushing the US 10 Yr below 0.90%. So far in Q4 2020, the yield on the US 10 Yr has traded within a tight 30 basis points between 0.68% and 0.98%, while MBS spreads have widened and tightened in response to these slight fluctuations, keeping interest rate pricing relatively flat.

Interest rates on FHA commercial loans continue to be around the same levels since our last update in late August. Expect interest rates to hang around these levels as long as the COVID-19 pandemic continues to play. Check out today's rates.

FHA Commercial Loan Rate Update – December 22, 2020

• 35-year fixed FHA perm loans: 2.15%-2.40%
• 40-year fixed FHA construction/perm loans: 2.90%-3.15% 

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.

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Interested in learning more about FHA's attractive 223(f) refinance loan program?
Click to learn more!