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.
Market Commentary:
For the week of Dec 29th – Jan 4th, 30-year and 15-year interest rates increased slightly.
The latest forecasts predict that mortgage rates will go down in 2024. As inflation has come down, so have mortgage rates. It's likely that price growth will continue to cool down this year. As that happens, the Federal Reserve has indicated that it will start cutting the federal funds rate. This will take some of the upward pressure off of mortgage rates and likely help them fall a bit further. We may even see 30-year rates finally drop back below 6%.
Fed Watch:
Looking ahead, all eyes are now on the upcoming January 31st, Federal Open Market Committee (FOMC) meeting. According to the CME Group, 0.00% of forecasters predict an increase in interest rates, while 93.3% predict rates will remain the same. 6.7% of forecasters expect rates to decrease. At the March 20, 2024, FOMC meeting, 62.1% predict the Fed will lower interest rates by 0.25% point and 4.3% predict 0.5% rate reduction.
Market Review:
Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 77.01% for purchase transactions, 14.84% for cash-out refinances, and 8.15% for rate and term refinances.
Per Black Knight 58.64 of all Retail loan production were Government Loans (FHA, VA, USDA), while 41.36% were Conventional and Non-Conforming loans.
News You Can Use:
- Mortgage demand should increase in 2024, says ICE’s Andy Walden
- Mortgages, auto loans, credit cards: Expert predictions for interest rates in 2024
- State-Level GDP in the Third Quarter of 2023
- ADP National Employment Report: Private Sector Employment Increased by 164,000 Jobs in December; Annual Pay was Up 5.4%
- The housing supply may not be able to keep up with demand next year, says Wedbush’s Jay McCanless
- Asking Rents Mostly Unchanged Year-over-year
- Condo? Can Do! Here’s Where Townhomes and Condos Will Deliver the Biggest Discounts for First-Time Homebuyers
*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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