Quiver Quantitative - The US mortgage market witnessed a notable decrease in rates for the sixth consecutive week, with the average rate for a 30-year fixed loan dropping to 7.03%, the lowest since August, according to Freddie Mac. This decline offers some respite to homebuyers grappling with the most elevated borrowing costs in recent years. However, the real estate sector remains challenging due to limited housing availability and persistently high home prices, impacting overall affordability.
Although there was an initial surge in purchase loan applications as rates began to decline, this trend has recently waned. Freddie Mac’s Chief Economist, Sam Khater, emphasized that for a more consistent revival in housing demand, rates would need to fall further. Current declines, though welcomed, are not sufficient to significantly stimulate demand in the housing market.
Market Overview: -Mortgage rates have fallen for six consecutive weeks. -The average rate for a 30-year, fixed-rate loan is now 7.03%. -This is the lowest level since August 2023. -The housing market remains tough, with limited inventory and high prices. -Purchase loan applications initially rebounded with the rate drop, but momentum has slowed.
Key Points: -Lower mortgage rates offer hope for homebuyers, but affordability remains a concern. -Further declines in rates are likely needed to stimulate demand significantly. -The Federal Reserve may pause its rate-hike campaign next week. -Continued improvement in inflation could lead to further rate reductions in 2024.
Looking Ahead: -The Federal Reserve's decision on interest rates next week will be closely watched. -The release of the government's monthly employment report on Friday could provide clues about the economy's health. -Continued progress on inflation could help bring down mortgage rates further. -The housing market is likely to remain volatile in the near term.
Looking ahead, Realtor.com economist Jiayi Xu forecasts a continuing improvement in inflation, leading to a further reduction in mortgage rates, potentially reaching around 6.5% by the end of 2024. This projection, if realized, could provide a substantial boost to the housing market, enhancing affordability and reigniting demand among prospective homebuyers.
This article was originally published on Quiver Quantitative