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Market Update - March 29, 2024

Friday, March 29, 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 and rebates.

Market Commentary:

For the week of March 22nd - March 28th, the 30-year and 15-year interest rates remained unchanged.

"Mortgage rates moved slightly lower this week, providing a bit more room in the budgets of some prospective homebuyers," said Sam Khater, Freddie Mac's Chief Economist. "We also are seeing encouraging data on existing home sales, which reflects improving inventory. Regardless, rates remain elevated near seven percent as markets watch for signs of cooling inflation, hoping that rates will come down further."

Despite remaining at elevated levels, most housing market experts anticipate mortgage rates to recede over 2024, especially once the Federal Reserve begins its expected interest rate cuts later this year.

 

Mortgage Rate Predictions for 2024:

Here's how some experts are predicting market conditions for 2024:

Freddie Mac. With the current stance of monetary policy holding steady, we expect mortgage rates to move sideways, remaining above 6.5% through this quarter and drifting down to about 6% by year's end.

Fannie Mae Housing Forecast. The 30-year fixed rate mortgage will average 6.3% in Q2 2024 and slowly decline over the year, landing at a Q4 average of 5.9%.

National Association of Realtors chief economist Lawrence Yun. "The budget deficit remains high, and the various inflation metrics remain above the comfort level. That means the mortgage rates will likely be in the 6% to 7% range for most of the year."

RSM U.S. real estate senior analyst Crystal Sunbury. "Assuming no significant economic shocks, mortgage rates are likely to continue slowly easing over the next few months, to reach a 6% to 6.5% range by spring of 2024."

Mortgage Bankers Association (MBA). MBA's baseline forecast is for mortgage rates to end 2024 at 6.1% and reach 5.5% at the end of 2025 as Treasury rates decline and the spread narrows.

Bank of America head of retail lending Matt Vernon. "The Fed's likely decision to cut rates in 2024 would be a key factor that could breathe new life into the housing market. However, it's important to note that significant drops in mortgage rates might not happen in the early months of 2024. If any reductions occur, they are likely to be gradual, possibly beginning in the latter part of the year."

Palisades Group chief investment officer and co-founder Jack Macdowell. "Our best guess is that mortgage rates will remain in the 7% to 7.25% range throughout Q1 2024." 

Bright MLS chief economist Dr. Lisa Sturtevant. During the early part of the year, expect some bumpiness in rates as new economic data are released and as more buyers get back into the market. However, the overall outlook for mortgage rates in 2024 suggests more rate drops, with Bright MLS forecasts predicting rates to hit 6.2% by the fourth quarter.

KPMG Economics senior economist Yelena Maleyev. "Mortgage rates are expected to stay below 7% in the coming months as inflationary pressures ease and the path to Federal Reserve rate cuts in the second quarter remains clear. Upside surprises to inflation, employment, and wages in the coming months would make the Federal Reserve consider waiting even longer to cut rates, which would then push up other interest rates, including mortgages."

 

Fed Watch: Looking ahead to the upcoming May 11th, Federal Open Market Committee (FOMC) meeting. According to the CME Group, 0.00% of forecasters predict an increase in interest rates, while 93.7% predict rates will remain the same. 6.3% of forecasters expect rates to decrease.

Market Review:

Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 84.77% for purchase transactions, 10.99% for cash-out refinances, and 4.24% for rate and term refinances.

Per Black Knight 52.12% of all Retail loan production were Government Loans (FHA, VA, USDA), while 47.88% were Conventional and Non-Conforming loans.

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