Economists cite global affairs and short-term bounces in rates following the Fed’s recent big interest rate cut as reasons for this week’s uptick in mortgage rates, but maintain that bigger-picture shifts like slowing price growth and increased inventory point to a positive outlook for the housing industry heading into the new year.
This week, Freddie Mac’s Primary Mortgage Market Survey® (PMMS®) tracked the 30-year fixed-rate mortgage average at 6.12% this week, up slightly from last week’s 2-year low of 6.08%.
“The decline in mortgage rates has stalled due to a mix of escalating geopolitical tensions and a rebound in short-term rates that indicate the market’s enthusiasm on rate cuts was premature,” said Sam Khater, Freddie Mac’s chief economist. “Zooming out to the bigger picture, mortgage rates have declined one and a half%age points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise. As a result, the backdrop for homebuyers this fall is improving and should continue through the rest of the year.”
This week’s stats:
- The 30-year FRM averaged 6.12% as of October 3, 2024, up from last week when it averaged 6.08%. A year ago at this time, the 30-year FRM averaged 7.49%.
- The 15-year FRM averaged 5.25%, up from last week when it averaged 5.16%. A year ago at this time, the 15-year FRM averaged 6.78%.
Realtor.com Senior Economist Ralph Mclaughlin added, “The market has continued to favor a cumulative 75 basis point cut by the end of the year, suggesting that at least one of the cuts will be another ‘jumbo,’ or 50-basis-point, cut. In contrast, Chairman Powell this week hinted nothing of the sort in his comments at the annual National Association of Business Economists meeting in Nashville, suggesting that cuts are only likely to be on the order of 25 basis point each in November and December. If Powell’s comments are accurate, then the market may be pricing too much of a drop by the end of the year, which could continue to push the 10-treasury upwards in the coming months as they adjust, sending mortgage rates slightly higher.”
He added, “While predicting and timing rates can at times be a fool’s errand, the good news for homebuyers is that homes are moving slow, inventory is rising, and price cuts are elevated, giving them a leg-up in the market they haven’t had in years.”
