More signs point to more favorable housing costs this week as average mortgage rates continued to fall, following an aggressive half a point cut to interest rates announced by the Federal Reserve on Wednesday.
The 30-year fixed-rate mortgage (FRM) averaged 6.09% this week, down from 6.20% last week, according to the latest Primary Mortgage Market Survey® (PMMS®), released by Freddie Mac Thursday.
Here’s a look at this week’s numbers:
- The 30-year FRM averaged 6.09% as of September 19, 2024, down from last week when it averaged 6.20%. A year ago at this time, the 30-year FRM averaged 7.19%.
- The 15-year FRM averaged 5.15%, down from last week when it averaged 5.27%. A year ago at this time, the 15-year FRM averaged 6.54%.
What the experts think:
“Mortgage rates continued declining towards the six% mark, reviving purchase and refinance demand for many consumers,” said Sam Khater, Freddie Mac’s chief economist. “While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market. Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity.”
Realtor.com Senior Economist, Ralph McLaughlin, commented, “Over the past month, we’ve seen a 180 degree turn of what markets expect. Why have the markets reversed course on their expectations? Chairman Powell made it very clear that the FOMC believes the battle against inflation has ended, and that their primary concern on the road ahead will be maintaining a healthy labor market. After a sequence of less-than-stellar job reports in July and August, markets are expecting the Fed to deliver another jumbo cut by the end of the year to help ease concerns about a softening labor market.
“How far can mortgage rates fall and what does it mean for the housing market? Since markets have already priced in yesterday’s 50 bps rate cut and the Fed is still being mum about their future plans, we don’t think there’s a major drop in the future and that rates could bottom out between 6%-6.2% range throughout the rest of the year and into the high 5’s by next spring.”
