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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 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 (as of 10/24/2024 – 12:30 PM EST):
Market Review: Optimal Blue's Production Metrics:
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
Interest rate and annual percentage rate (APR) are based on current market conditions as of 10/24/2024, 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 10/124/2024 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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