Market Update - December 29, 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.

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Market Commentary:

For the week of Dec 22^nd - Dec 28^th, 30-year and 15-year interest rates overall decreased slightly. Looking ahead, experts forecast mortgage rates will decrease in 2024, and buyers will pay fewer discount points. By summer, first-time home buyers should expect current mortgage rates near 4.25 percent. Inflation will cease to be a story in 2024. It’s the soft landing everyone’s been asking for.

• Mortgage Rates Doubled (January – February 2023)
  • January mortgage rates were near six-and-half percent, double the rate from one year prior. A lot of home buyers chose to sit the market out.
• Inflation Pressures (March – October 2023)
  • In mid-March, with strong economic data casting doubt on the death of inflation, the Federal Reserve raised its benchmark interest rate another 25 basis points and followed the action with hawkish comments and a promise to raise rates again if needed.
• A Downhill Finish For The Year (November – December 2023)
  • It wasn’t until the Federal Reserve’s October 31 – November 1, 2023, meeting that home buyer fortune turned. Fed Chair Jerome Powell about-faced and suggested that inflation may be coming into control after all.

Fed Watch: Looking ahead, all eyes are now on the upcoming January 31^st, Federal Open Market Committee (FOMC) meeting. According to the CME Group, 0.00% of forecasters predict an increase in interest rates, while 83.5% predict rates will remain the same. 16.5% of forecasters expect rates to decrease.

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News You Can Use:

• 2024 Mortgage Rates: A 4.25% Forecast
• Inflation Adjusted House Prices 2.4% Below Peak; Price-to-rent index is 6.7% below recent peak
• Home prices are expected to be flat in 2024, says Zillow’s Skylar Olsen
• We see activity in the housing market picking up in 2024, says Frontdoor CEO Bill Cobb
• S. Home Prices Hit an All-Time High in October, Case-Shiller Says
• Housing expectations for 2024: What you need to know
• FHFA’s National Mortgage Database: Outstanding Mortgage Rates, LTV and Credit Scores
• Top Posts of 2023: Home Prices and Construction Costs
• Americans could save up to $300 a month on their mortgages if interest rates drop as expected in 2024

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

Interest rate and annual percentage rate (APR) are based on current market conditions as of 12/28/2023, 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 12/28/2023 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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