Mortgage rates fall for the second time in 2024


The US housing market is expected to see a warm return this spring, thanks to quiet economic data.

The average interest rate on a 30-year loan fell to 6.63% from 6.69% the week before, Freddie Mac said Thursday. Mortgage rates fell for a second time in 2024, and are expected to fall further as inflation moderates, which could help the housing sector rebound.

As most indicators indicate To lower interest rates next yearHousing experts expect the spring buying season to be busier starting in the next couple of months as more supply and demand return to the housing market thanks to lower mortgage rates.

“As long as core inflation and economic activity continue to moderate, mortgage rates are not expected to rise further,” said Orvi Devongi, chief macroeconomist at Zillow. “If layoffs remain low and mortgage rates decline, housing market activity should rebound modestly this spring — meaning more listings coming on the market and more sales.”

Mortgage applications fall

The potential for a roaring spring housing market will depend largely on where mortgage rates go next. Home buyers have once again proven that they are interest rate sensitive amid today’s rising home prices. After a slight increase in interest rates last week, the volume of mortgage application activity declined by 7.2% on a weekly basis, according to a recent report. Scan the application It was tracked by the Mortgage Bankers Association (MBA) for the week ending January 26.

“The low supply of existing housing limits options for potential buyers and keeps home price growth high, creating a double whammy that continues to constrain homebuying activity,” said Joel Kahn, deputy chief economist at MBA.

Affordability challenges were also exacerbated by interest rate hikes last week. The average loan size for purchase orders rose to $444,100, the largest since May 2022, according to MBA.

However, low application rates and hardships do not mean homebuyers have disappeared. The Redfin Home Buyer Demand Index — which measures buyer requests for home tours and other buying services on Redfin — showed interest increased 6% over the past seven days in the week ending January 28.

“I think this year the market will take off in the spring, once 6% interest rates become more ingrained in buyers’ psyches and more homeowners are listing their homes,” said Hal Bennett, a Redfin Premier agent.

Federal Reserve Chairman Jerome Powell speaks during a press conference on Federal Reserve monetary policy Wednesday, January 31, 2024 in Washington. (Alex Brandon/AP Photo) (News agency)

Wall Street banks and industry experts expect cuts. Wells Fargo said in its annual 2024 forecast that the economy will moderate by mid-2024, prompting the Federal Reserve to cut interest rates by 225 basis points by early 2025. Fannie Mae housing experts expect mortgage rates to fall below 6% by the end of 2024, settling at about 5.8%.

During yesterday’s Federal Open Market Committee meeting, the Federal Reserve announced that it would keep interest rates steady in an attempt to suppress inflation to 2%. However, Federal Reserve Chairman Jerome Powell expressed optimism that interest rates have peaked and a cut could come soon. But any drop is not a guarantee.

“Inflation is still very high, continued progress in reducing it is not guaranteed, and the path forward is uncertain,” Powell said during the Federal Open Market Committee conference.

The latest personal consumption expenditures (PCE) index – the Fed’s preferred measure of inflation – rose 2.6% annually in December, falling below 3% for the first time since March 2021. But more importantly, the annual PCE index using… Data from the previous three to six months index is now less than 2%.

“The lower inflation readings over the second half of last year are welcome, but we will need to see continued evidence to build confidence that inflation is moving sustainably lower toward our target,” Powell added.

Rebecca Chen is a reporter at Yahoo Finance and previously served as an investment tax certified public accountant (CPA).

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