Fall Mortgage Rate Analysis
Presented by Marc Aarons
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.
Please don’t hesitate to reach out with any questions or concerns.
Marc Aarons may be reached at 714-887-8000 or Email Marc
This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.
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