Economic activity has remained flat in most parts of the U.S. since early September, according to the Fed's survey of regional business contacts.

Household debt totaled $20.2 trillion through the 2nd quarter. The current debt delinquency rate is 2.74%, the highest in nearly 12 years.

Initial jobless claims fell for the 2nd straight week, but continuing claims increased to nearly 1.9 million, the most in 3 years.

New single-family home sales jumped 4.1% to 738K in September, 6.3% higher than a year ago. The median sales price was $426,300.

Existing home sales, however, fell to a 14-year low. Buyers pulled back amid uncertainty over the upcoming election and higher mortgage rates.

Mortgage applications fell to the lowest level since July as rates moved higher. Purchase apps dropped 5%, and refi apps were down 8%.

Retail sales strengthened by more than forecast in September. Resilient consumer spending continues to power the economy.

Jobless claims fell much more than economists expected last week, after reaching their highest level of the year during the previous week.

The signs of a strong economy and a rebounding labor market, along with higher inflation, are pressuring bonds and pushing mortgage rates higher.

Builder sentiment moved up for a second consecutive month. Builders look forward to a busy 2025 despite challenging conditions.

Mortgage apps for new home purchases rose 10.8% year over year in September, with an average loan size of $402,658 for newly built homes.

For the week, overall purchase mortgage applications dropped 7% but were 7% higher than the same time last year.

The economy added far more jobs than expected in September while unemployment fell, pointing to a stronger labor market than believed.

September's inflation rate was higher than forecast. When combined with the blowout jobs report, it reduces the likelihood of Fed rate cuts.

Jobless claims rose last week to the highest level in over a year. The increase is likely due to the aftermath of Hurricane Helene.

 

An NAHB survey found technologies to improve energy efficiency and security are most likely to influence a home buying decision.

ICE reports the average property insurance payment for single-family homes is up 52% from 2020, as natural disasters have cost insurers billions.

Mortgage applications dropped 5.1% as rates started to rise last week. Both refinance and purchase apps fell from the previous week.

Job openings unexpectedly increased in August after 2 straight monthly declines, but hiring was soft and consistent with a slowing labor market.

In September, however, private sector hiring picked up, according to ADP. The labor market is holding its ground despite some signs of weakness.

Fed Chair Powell said the recent half-point policy rate cut shouldn’t be interpreted as a sign that future moves will be as aggressive.

August’s pending home sales edged up 0.6% from July's record low but were down 3% year over year as affordability remains a concern.

Construction spending fell in August as companies scaled back projects while awaiting confirmation of Fed rate cuts.

A fall 2024 Investor Sentiment Index showed that 68% of investors view the current housing market as “better” or “much better” than a year ago.

 

What are points, and how much do they cost?

"Points" or "Discount Points" are a type of prepaid interest you can pay upfront to lower the interest rate on your mortgage. One point equals 1% of the loan amount.

Example:

• 1 point on a $100,000 loan = $1,000.

Should You Pay Discount Points?

To decide if paying points is a good idea, calculate your break-even point. This is when the money you save from a lower interest rate equals the upfront cost of the points.

Example:

• On a $100,000 loan, paying 1 point reduces your interest rate by 0.25%, saving you $15.17 per month.
• Break-even calculation: $1,000 (cost of points) ÷ $15.17 (monthly savings) = 65.9 months.

If you plan to own the property beyond this break-even period, it may make sense to pay the points.

The Rest of the Equation

Points can be tax deductible in the year paid on purchase loans and over the life of the loan on refinances (always consult with your tax professional for advice). A lower real cost could shorten the break-even period.

Example:

• If you’re in the 28% tax bracket, a $1,000 point payment could have a real cost of $720.
• Break-even period: $720 ÷ $15.17 = 47.5 months.

The Risks of Paying Points

Once you've paid points, that money is spent. If you sell or refinance before reaching the break-even point, you could lose the value of those points.

Alternatives To Paying Points 

Increase Your Down Payment

• Adding more to your down payment will lower your loan balance and your monthly payment—without needing to reach a break-even point.
• Example: Borrowing $1,000 less on a 30-year loan at 5% saves you $5.37 per month.

Save The Money

Cash reserves sometimes prove more valuable than a slightly lower payment.

Bottom Line: Weighing Your Options 

When deciding whether to pay mortgage points, ask yourself:

• Are you a short-term or long-term homeowner?
• Do you prefer a lower monthly payment, more cash reserves, or more home equity?
• Will you likely refinance before reaching the break-even point?

Each option has its pros and cons, and the best choice depends on your personal situation. We’re here to help you evaluate your options and run the numbers.

Contact us today at 888-616-9885 or click here.