Confused about mortgage rates? Get a clear breakdown of this week’s trends, next week’s forecast, and expert predictions for the rest of 2024. Last week brought a welcome dip in rates, offering a temporary reprieve for potential homebuyers. But before you celebrate, let’s unpack the factors influencing these rates and what you might expect in the coming days.
Last Week’s Recap: A Glimpse of Sunshine
The week ending June 13th provided a bit of good news for homebuyers. According to the latest Primary Mortgage Market Survey®, both 30-year and 15-year fixed-rate mortgages saw a slight decrease compared to the previous week. The 30-year fixed-rate mortgage (FRM) dipped to an average of 6.95%, down 4 basis points from the prior week.
This follows a year of increases, with the rate up 26 basis points from June 2023. The weekly average is slightly lower than the 4-week average of 6.98%, but still higher than the 52-week average of 7.02%. It’s important to note that rates have fluctuated throughout the year, with a 52-week range of 6.6% to 7.79%.
The 15-year FRM also saw a decrease, falling to 6.17%, a 12 basis point drop from the previous week. This is a smaller increase year-over-year compared to the 30-year FRM, with rates only up 7 basis points since June 2023. The 4-week average for the 15-year FRM is 6.27%, and the 52-week average is 6.33%. The 52-week range for the 15-year FRM is 5.76% to 7.03%.
The CPI, a key indicator of inflation, came in slightly better than anticipated. This, combined with the Fed’s decision to maintain current interest rates, instilled some optimism in the mortgage market. While a dramatic drop in rates isn’t likely in the immediate future, Fed Chair Jerome Powell’s positive comments regarding the overall health of the economy suggest some improvement over time. However, significant movement in rates might take several months.
Next Week’s Forecast: Uncharted Territory
The first half of June was expected to be relatively stable for mortgage rates. However, June 12th presented a unique challenge: a confluence of events that can significantly impact mortgage rates.
On that day, both the Bureau of Labor Statistics released the monthly Consumer Price Index (CPI) data and the Federal Open Market Committee (FOMC), a group within the Federal Reserve, concluded its policy meeting. The CPI report is a key indicator of inflation, and the FOMC meeting sets the direction for the federal funds rate, which has a ripple effect on other interest rates, including mortgage rates.
Traditionally, these events are spread out throughout the month, allowing the market to absorb the information and react accordingly. But the coincidence of both events on June 12th created uncertainty. A positive CPI report, indicating potentially lower inflation, could put downward pressure on mortgage rates.
Conversely, hawkish comments from the Fed about raising interest rates in the future could push mortgage rates upward. How these two events interplay and what impact they have on next week’s rates remains to be seen.
Mortgage Rates Forecast for Next Week
Here’s hoping next week is relatively uneventful, with mortgage rates staying put or dipping slightly. But predicting these changes on a weekly basis is notoriously difficult and can be inaccurate. The economic data can be interpreted in different ways, and the Fed’s pronouncements can be vague. So, it’s wise to temper your expectations and be prepared for some ups and downs.
Expert Insights: Navigating the Murky Waters
Mortgage rate forecasters like Fannie Mae and the Mortgage Bankers Association (MBA) have adjusted their predictions for the year upwards, reflecting inflation’s persistent strength. Fannie Mae, the government-sponsored enterprise, is known for its generally more conservative outlooks. Their most recent forecast suggests mortgage rates may hold steady or even creep slightly higher in the near future. However, they predict rates will start to trend downward by the first quarter of 2025, reaching an average of 6.9%.
The Mortgage Bankers Association (MBA), a trade group representing the real estate finance industry, tends to take a more optimistic stance. While they acknowledge the influence of inflation, they believe the Federal Reserve will be successful in curbing it without derailing economic growth. As a result, the MBA predicts that mortgage rates will start to trend downward later this year, reaching an average of 6.4% by the first quarter of 2025. This aligns with their prediction of a decrease throughout 2 quarters of 2024, reaching 6.5% by the end of Q3.
Both Fannie Mae and the MBA, along with the National Association of Realtors (NAR), predict that the 30-year fixed-rate mortgage will decline at least half a percentage point through the middle of 2024. Here’s a summary of their predictions for the rest of the year:
| Quarter | Fannie Mae | Mortgage Bankers Association |
|---|---|---|
| 2024 Q2 | 7.1% | 6.9% |
| 2024 Q3 | 7.1% | 6.7% |
| 2024 Q4 | 7.0% | 6.5% |
It’s important to note that these are just predictions, and the actual rates could be higher or lower. Freddie Mac’s weekly survey also provides some insight, with their forecast for the 30-year fixed-rate mortgage averaging 6.9% by the first quarter of 2025.
The Takeaway: Be Prepared
The coming week could see some fluctuations in mortgage rates. While a significant drop isn’t likely, staying informed is critical. Closely monitor economic news and pronouncements from the Fed. If you’re serious about buying a home, consider consulting with a qualified mortgage professional. They can help you understand your options, navigate the complexities of the market, and guide you through the process in this evolving environment.
Remember, the mortgage market can be unpredictable. By staying informed and working with a trusted professional, you can be better prepared to secure the best possible interest rate for your new home.
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