Financial Update: October 1, 2024
The end of summer brought an eventful several months in the mortgage markets. Just as the fall season approached, the Federal Reserve (Fed) reduced interest rates and mortgage rates fell. Lower rates are here, so let’s explore!
Rate Cut!
A rate cut from the Fed is what many of us have been waiting for. And the September 18th decision was for not just any rate cut but a supersized 50-basis-point reduction in the overnight lending rate. This is great news for potential borrowers.
As the Fed cuts interest rates, mortgage rates tend to decrease. There is no rocket science here. The recent rate-cutting action by the Fed has translated to lower mortgage rates and is the first Fed rate cut in four years.
Analyst Estimates
There are always various perspectives regarding mortgage interest rates, but there is a general current consensus. Here’s a sampling of what experts have to say:
- Lawrence Yun, Chief Economist at the National Association of REALTORS (NAR), correctly predicted that mortgage rates would hit 6.2% in September. “There will be more inventory and more home buyers. Some further declines are possible in 2025, though mortgage rates will not go down to 5% or lower because of the massive federal budget deficit,” said Yun.
- Freddie Mac expects rates to remain above 6% by year-end.
- Danielle Hale speculated that mortgage rates will reach 6.3% toward the end of 2024.
Residential Real Estate Landscape
According to a recent report by the National Association of REALTORS, existing home sales declined 2.5% in August and sales were down 4.2% versus one year prior. But the recent decline in mortgage interest rates coupled with a still-quiet market overall could create a solid environment to buy this fall.
Nationally, many markets appear to have expectations for improving demand supported by lower mortgage rates. In fact, active listings have picked up significantly compared with last year. Pricing, however, has remained firm despite rising inventory.
Refinancing Activity Jumps
Homeowners with mortgages originated at higher rates are looking to lower their monthly payments, with refinance applications surging in what is being called a “mini-boom.”
Weekly data from early fall showed home refinances making up nearly 56% of applications, with a 20% increase in applications from the previous week.
Lower rates are translating to lower monthly payments for folks who took out mortgages at higher levels. A drop in interest rates on 30-year mortgage rates from the 7s to the low 6s can have a substantial effect on the monthly payment amount and total cost of the loan.
If your current mortgage has an interest rate at higher rates than the present market rates, contact me, and we can explore our options.
Putting It All Together
It is all about the Fed rate cut for buyers and refinancers right now. If you are looking to buy with the recent improvement in home affordability or would like to know how much money you could save each month with a refinance at current rates, let me know. We will crunch the numbers!
As always, I’m here as a resource when you need me.
Disclosure:
This material provided by Levitate. Levitate is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc. Indices are unmanaged and do not incur fees, one cannot directly invest in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Past performance does not guarantee future results. The information provided has been derived from sources believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete analysis of the material discussed, nor does is constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned.
Disclosure:
This material provided by Levitate. Levitate is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc. Indices are unmanaged and do not incur fees, one cannot directly invest in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Past performance does not guarantee future results. The information provided has been derived from sources believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete analysis of the material discussed, nor does is constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned.