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 Oct 18th to Oct 24th, interest rates increased. You might expect that mortgage rates would be falling right now after the Federal Reserve cut interest rates by a half-point last month. Here's the thing: The Fed can influence mortgage rates, but it doesn't set them. Instead, mortgage rates mainly follow a different number: the yield on 10-year Treasury bonds. That yield has gone up recently for a number of reasons, including because investors are expecting the Fed to be a little more cautious in cutting rates after the jumbo-sized cut last month. That said, despite the recent uptick, mortgage rates are still more than a full point lower than they were this time last year; falling as investors anticipated the Fed's rate cuts and factored those into the 10-year Treasury yield.
The lower mortgage rates compared to a year ago have been good for some homeowners. Lots of people have taken advantage and refinanced their mortgages if they bought their homes in the last couple of years, when rates were higher. The lower rates available now mean those homeowners can potentially save hundreds of dollars a month if they refinance.
Here's a positive development for buyers: There's more inventory now. The number of homes for sale in September was 6.4% higher than a month earlier and 33.6% above a year ago, in 52 markets. Meanwhile, the days a house stays on the market have been increasing — suggesting the market is getting a bit less competitive. Fannie Mae is predicting that home sales could be 10% higher next year, coming off the very low levels we’ve been seeing. But it could be spring before the market really picks up.
Here’s a closer look at where some major housing authorities predict mortgage rates will go this year and next:
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 | 7.1% | 92.9% | 0% | 0% |
| December 18 | 1.7% | 28.3% | 70.0% | 0% |
| January 29 | 0.6% | 10.7% | 42.3% | 46.4% |
Market Review:
Optimal Blue’s Production Metrics:
U.S. Housing Outlook - October 2024
Map shows which U.S. states have seen the sharpest increase in mortgage rates this year, driven by a combination of economic factors, including inflation and fluctuating real-estate demand:
It’s rare for home prices to fall in general since 1942. If you take 2007-2011 out of the equation, we have had only one year go negative; that was 1990, and that was only a 1% decline.
Rate Reviews:
Since the Fed cut rates by 50bps on 9/18/24, the 10-year Treasury has steadily risen from 3.68% to the current 4.23%. This is because investors think the rate cut is better for stocks than bonds because there is now increasing hope that a soft landing gets replaced with no landing. Add rising inflation fears, massive Treasury debt issuance, a bellicose Fed, and now the possibility of a Republican sweep.
- Elliot Eisenberg, Ph.D. , Economist
News You Can Use:
- Surprising changes coming soon for mortgages and down payments
- September home sales drop to lowest level since 2010
- Housing Cost Burdens Across Congressional Districts
- IMF says global fight against inflation is ‘almost won’ but warns of rising risks
- Fed's Logan says 'strong and stable U.S. economy faces 'meaningful uncertainties'
- The Top 10 States To Live In for the Best, Most Blissful Work-Life Balance
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
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