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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 25th to Oct 31st, interest rates increased for the fifth consecutive week. Mortgage rates reached their highest level since the beginning of August. Per Sam Khater, Freddie Mac's Chief Economist, "With several potential inflection points happening over the next week, including the jobs reports, the 2024 election, and the Federal Reserve interest rate decision, we can expect mortgage rates to remain volatile. Although uncertainty will remain, it does appear mortgage rates are cresting, and we do not expect them to reach the highs that we saw earlier this year."
Looking past the elections and into 2025, the Mortgage Bankers Association (MBA) stated at their 2024 Annual Convention that total mortgage origination volume is expected to increase to $2.3 trillion in 2025, up from 2024 expectations. The half a billion increase in volume will be assisted by a further demand in housing and lower interest rates. The MBA is forecasting lower rates in 2025, ending at around 5.9 percent.
Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 10/31/2024 – 12:30 PM EST):
Market Review: Optimal Blue's Production Metrics:
Single Family Mortgage Originations
Per FNMA Single-Family Mortgage Originations:
"We expect 2024 purchase origination volume to be $1.3 trillion, a downward revision of $20 billion from the prior forecast. This revision is driven by a somewhat weaker expectation for existing home sales. In 2025, we expect purchase volumes to grow by 15 percent year over year to $1.5 trillion. For refinances, we now expect 2024 volume to be $375 billion, a slight upward revision from last month's forecast given the lower mortgage rate path. We expect 2025 volumes to come in at $649 billion, an upward revision of $23 billion from the prior forecast, again driven by the lower expected mortgage rate path. These upward revisions are consistent with a slight uptick in refinance application activity."
Mortgage Rates Revised per FNMA
"We revised downward our mortgage rate forecast for 2024 given the recent decline in longer-term interest rates. We now forecast the 30-year fixed mortgage rate to average 6.6 percent in 2024 (down one-tenth from last month's forecast and to average 5.9 percent in 2025, down one-tenth. However, interest rates remain volatile, particularly given changes to Fed policy expectations, which adds risk to our outlook. Following the completion of our beginning-of-the-month interest rate forecast and as of this writing, 10-year Treasury rates have decreased approximately 26 basis points, leading to some downside risk to our current baseline mortgage rate forecast."
Personal Income Charts
Real Personal Consumption Expenditures (PCE)
Abode Absence
At the onset of the 2008 Housing Bust, there was an excess supply of houses of 1.25 million, and that exacerbated the subsequent steep decline in home prices. Currently, there is a shortage of housing. Estimates, using very different methodologies, peg the gap at between 1.5 million and 5.5 million units. The average is 3.4 million, equivalent to slightly over two years of production, a very large amount. - Elliot Eisenberg, Ph.D. , Economist
News You Can Use
- MBA Forecast: Mortgage Originations to Increase 28 percent
- Bloomberg survey favors Harris for Housing costs, trump for investors and crypto
- Consumer Confidence surges.
- America's economy just achieved the rare feat of a soft landing
- Millennials Take Home Buying Lead; Here's What They Want Most
- FHFA's Appraisal Waivers Expansion
Interest rate and annual percentage rate (APR) are based on current market conditions as of 10/31/2024, 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 Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 10/31/2024 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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