- Mortgage rates remain unchanged despite expectations of a future interest rate cut
- Market optimism for a rate cut in May based on CME’s FedWatch tool
- Economy shows signs of strength with a robust jobs report in January
- Forecasters predict rates to decrease to the 6% range by the end of 2024
In the most recent week, mortgage rates have stayed the course despite the U.S. Federal Reserve’s decision to leave interest rates unchanged, with the possibility of cutting them later in the year. While the market is hopeful for an interest rate cut in May based on the CME’s FedWatch tool, mortgage rates have barely budged. This comes as the economy continues to show signs of strength, including a January jobs report that exceeded expectations.
Current Mortgage Rates and Trends
According to data released by Freddie Mac on Thursday, the 30-year fixed-rate mortgage rose and averaged 6.64% as of February 8. This is a slight increase of 1 basis point from the previous week. Comparatively, a year ago, the 30-year fixed-rate mortgage was averaging at 6.12%. The average rate on the 15-year mortgage was 5.9%, down from 5.94% the previous week. A year ago, the 15-year mortgage rate was at 5.25%. Separate data from Mortgage News Daily stated that the 30-year fixed-rate mortgage was averaging at 6.95% as of Thursday afternoon.
Expectations for Rate Decrease
Despite the current stability in mortgage rates, forecasters are expecting rates to come down to the 6% range by the end of 2024. This prediction is based on factors such as the anticipated rate cuts by the Federal Reserve and the overall state of the economy. Homebuyers may be feeling frustrated by the lack of immediate rate decreases, but experts suggest that as we move through 2024, mortgage rates should start to move lower.
Affordability and Housing Market Challenges
Sam Khater, the chief economist at Freddie Mac, highlighted the ongoing issue of affordability in the housing market. High home prices, elevated mortgage rates, and low supply of homes on the market pose challenges, particularly for first-time and low-income homebuyers. The current stability in mortgage rates does not alleviate these affordability concerns, making it difficult for many potential buyers to enter the market.
While mortgage rates have remained steady in the most recent week, despite expectations of a future interest rate cut, experts remain optimistic that rates will decrease as we progress through 2024. Affordability in the housing market continues to be an ongoing issue, with high home prices and elevated mortgage rates. Despite the current challenges, the market is hopeful for a more favorable environment for homebuyers in the future.