Market Update - August 16, 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 Aug 9^th to Aug 15^th, interest rates decreased. “Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing," says Sam Khater, Freddie Mac’s chief economist, of the latest data. “The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move. Additionally, this drop in rates is already providing some existing homeowners the opportunity to refinance, with the refinance share of market mortgage applications reaching nearly 42 percent, the highest since March 2022.”

Mortgage Rate Predictions for 2024:

Here is how some experts predict market conditions will affect the average 30-year, fixed-rate mortgage in Q3 2024 and beyond:

Freddie Mac: Rates will remain elevated through most of 2024. In its July Economic, Housing and Mortgage Market Outlook forecast, Freddie Mac said it anticipates that the central bank will approve one rate cut later this year. While this should prompt a gradual easing of mortgage rates, the mortgage giant expects mortgage rates to remain above 6.5% through the end of the year and then descend below 6.5% in 2025.

Fannie Mae: Rates will average 6.8% in Q3 and 6.7% in Q4. Fannie Mae expects the average 30-year fixed mortgage rate to trend slightly down between Q3 and Q4 2024. Fannie Mae forecasts the downward trend will continue into the next year, and the 30-year fixed rate will average 6.5% in Q1 2025.

National Association of Realtors (NAR): Rates will average 6.9% in Q3. NAR expects the 30-year fixed mortgage rate to average 6.9% in its most recent quarterly forecast published in June, an increase from its previous forecast of 6.7%. The professional real estate organization also revised its forecast upward for Q4 to 6.5% to 6.7% by the end of 2024. “In the second half of 2024, look for moderately lower mortgage rates, higher home sales and stabilizing home prices,” said chief economist Lawrence Yun, in a June press statement.

Mortgage Bankers Association (MBA): Rates will average 6.8% in Q3. MBA expects the 30-year fixed-rate mortgage to decline throughout the rest of the year, averaging 6.8% in Q3 and then landing at 6.6% in Q4, according to the real estate finance association’s July Mortgage Finance Forecast. MBA economists anticipate rates to continue trending downward next year, averaging 6.4% in Q1 2025.

Fed Watch:

Target rate (in bps) possibilities, according to the CME Group:

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News You Can Use:

• Fed Chief Musalem says 'time is nearing' for Fed to cut interest rates
• Consumer spending jumped in July as retail sales were up 1%, much better than expected
• A U.S. construction boom is sending rents lower and creating perks for renters
• Fed's Bostic downplays recession fears
• Home equity is ‘not like bread,’ expert says — ‘It won’t go stale.’ Here’s when it makes sense to tap it
• Nearly 90% of Metro Areas Registered Home Price Gains in Second Quarter of 2024

‍*Communication is intended for Industry Professionals only and not intended for Consumer Distribution

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Interest rate and annual percentage rate (APR) are based on current market conditions as of 08/15/2024, 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 08/15/2024 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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