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.
For the week of Oct 4th to Oct 10th, interest rates remained flat to slightly higher. “Following the release of a stronger-than-expected September jobs report, the 30-year fixed rate mortgage saw the largest one-week increase since April,” said Sam Khater, Freddie Mac’s Chief Economist. “However, we should remember that the rise in rates is largely due to shifts in expectations and not the underlying economy, which has been strong for most of the year. Although higher rates make affordability more challenging, it shows the economic strength that should continue to support the recovery of the housing market.”
“In the wake of stronger economic data last week, including the September jobs report, mortgage rates moved higher,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association. “While the worst may be over in terms of the rapid, upward movement, it will take new data to put compelling downward pressure on rates,” said Matthew Graham, chief operating officer at Mortgage News Daily. "The larger-than-anticipated gain in the September consumer price index doesn’t signal a reacceleration in inflation, nor will it deter the Federal Reserve from cutting interest rates by 25 basis points at its November meeting," wrote Oxford Economics' Chief U.S. Economist Ryan Sweet. "The Fed needs to continue to normalize interest rates to keep the economy on the path toward a soft landing.
Fannie Mae: Fannie Mae's latest forecast predicts that 30-year mortgage rates will end the year around 6.20% and drop into the 5% range in 2025. By the end of next year, rates could fall to 5.70%.
Freddie Mac: In their September outlook, Freddie Mac researchers said they believe mortgage rates will decline further this year but remain above 6%. They also noted that shifting expectations around Federal Reserve rate cuts could cause some temporary volatility as investors try to figure out what the Fed will do at its upcoming meetings.
The Mortgage Bankers Association: Similar to Fannie Mae, the MBA sees mortgage rates ending 2024 around 6.20% and continuing to trend down throughout 2025. The group thinks rates could end 2025 at 5.8% and hold steady in 2026.
The National Association of Realtors: NAR's quarterly outlook has 30-year mortgage rates ending 2024 at 6.1% and bottoming out around 5.8% toward the end of 2025. After that, we could see rates tick back up to 6.1% in 2026.
Realtor.com: In their mid-year forecast update, which was released in August, Realtor.com economists predict that mortgage rates will end the year at 6.3%.
The National Association of Home Builders: In its latest housing and interest rate forecast, NAHB predicts that mortgage rates will average 6.64% in 2024 and fall to 5.86% in 2025. It also believes rates could ease further in 2026, decreasing to a yearly average of 5.49%.
Fed Watch:
Target rate (in bps) possibilities, according to the CME Group:
| Upcoming Federal Reserve Meeting |
Current (4.75% - 5.00%) |
0.25% Reduction (4.50% - 4.75%) |
0.50% Reduction (4.25% - 4.50%) |
0.75% Reduction (4.00% - 4.25%) |
| November 7 | 9.5% | 90.5% | 0% | 0% |
| December 18 | 0.2% | 11.3% | 88.5% | 0% |
| January 29 | 0% | 2.2% | 26.0% | 71.8% |
Optimal Blue’s Production Metrics:
From 1933-2022, the average annual S&P 500 return with a Republican president and split Congress is 13.7%, while it’s 13.6% with a Democratic president and a divided Congress. The average return slips to 13%/year with a Democratic White House and full Republican Capitol Hill control, and it’s 12.9%/year for the inverse. Full Democratic control is associated with a 9%/year average return, full Republican control averages 4.9%/year. Divided Congress is best.
- Elliot Eisenberg, Ph.D. , Economist
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
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