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Market Update - September 8, 2023

Friday, September 8, 2023

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 Optimal Blue. Rates are updated in real-time. Optimal Blue data is calculated using actual locked rates with consumers across 42% of all mortgage transactions nationwide. Rates are inclusive of locks that occur below par, at par and therefore consider discounts and rebates.

Market Commentary:

For the week of Sept 1st – Sept 7th, 30-year and 15-year interest rates increased slightly.

Following a series of interest rate hikes at 10 consecutive meetings in 2022 and 2023, the Federal Reserve finally paused at its June 14 meeting — only to resume July 26, with a one-quarter percentage point increase. Inflation has fallen to 3 percent, near the Fed's official goal of 2 percent, and housing economists say the end is near for the central bank's intense fight against inflation. "We do expect mortgage rates to trend down once the [Federal Open Market Committee] clearly signals that they have reached the peak for this cycle, as the reduction in uncertainty with respect to the direction of rates should narrow the spread of mortgage rates relative to Treasury benchmarks," says Mike Fratantoni, Chief Economist at the Mortgage Bankers Association.

Mortgage Rates Forecast for Q1 and Q2 2024, as of September 2023:

Detailed predictions from economists, as of August 2023:

Freddie Mac: "Due to lower home sales, purchase origination volumes are expected to remain muted this year, while high mortgage rates keep refinance activity low."

National Association of Realtors (NAR): Deputy Chief Economist and Vice President of Research Jessica Lautz. "The 30-year fixed interest rate for mortgages has remained stubbornly high. The expectation is that the Fed will see the ease in inflation and there will be a ripple effect to the mortgage market. By 2024, NAR anticipates the 30-year fixed rate will be at 6%, which will be welcome relief to potential home buyers."

Fed Watch: Looking ahead, all eyes are on the upcoming September 20th Federal Open Market Committee (FOMC) meeting. According to the CME Group, 7% of forecasters predict an increase in interest rates, while 93% predict rates will remain the same. None of the forecasters expect rates to decrease.

Market Review:

Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 87.38% for purchase transactions, 10.11% for cash-out refinances, and 2.52% for rate and term refinances.

Per Black Knight 50.20% of all Retail loan production were Government Loans (FHA, VA, USDA), while 49.80% were Conventional and Non-Conforming loans.

News You Can Use

Interest rate and annual percentage rate (APR) are based on current market conditions as of 09/07/2023, 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 09/07/2023 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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