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 Aug 23rd to Aug 29th, interest rates remained steady. The key event to watch is the Federal Reserve meeting scheduled for September 17-18. Many financial experts and market watchers believe that is when the Fed will cut its key interest rate for the first time this year. The Fed also indicated recently that it is likely to cut rates at the September meeting. So how much will a September Fed rate cut impact mortgage rates? Buyers who are eagerly anticipating a significant mortgage drop in September may want to temper their expectations. The general consensus among analysts and experts is that the Fed benchmark rate will be lowered by 25 basis points in September.
Fed Watch:
Target rate (in bps) possibilities, according to the CME Group:
Mortgage Rates Are Projected To Come Down Slightly
Market Review: Optimal Blue's Production Metrics:
The markets that could see the biggest affordability boost from falling rates:
Easiest and hardest housing markets for homebuyers right now:
Expect More Homes to Sell:
Home Prices Will Go Up Moderately:
Fed Funds
During Powell's recent Jackson Hole speech, he repeatedly said the labor market is weaker than pre-Covid, when Fed funds was 1.75%! Currently, markets are expecting a terminal Fed funds rate of 3.25%, with 100bps of cuts through December and another 100bps in CY2025. 3.25% seems improbably high, as the neutral rate is maximally 2.75%. By invoking pre-Covid times, Powell's hinting the terminal rate may well be lower than markets expect.
- Elliot Eisenberg, Ph.D. , Economist
News You Can Use
- Weekly mortgage demand stalls, even though rates drop to lowest since April 2023
- Housing affordability has improved despite latest Case-Shiller data, says Morgan Stanley’s Jim Egan
- Harris’ housing policy might have a path to be enacted due to tax credits, says TD Cowen’s Seiberg
- Housing Market Trends 2024: Current Patterns and Predictions
- Home Price Gains Continue to Slow
- US Economy Expands at Revised 3% Rate on Resilient Consumer
Interest rate and annual percentage rate (APR) are based on current market conditions as of 08/29/2024, 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 HomeServices Lending, LLC. Not available in all states. Rate is as of 08/29/2024 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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