Mortgage Rate Forecast

wooden house and coins

It is hard to believe that in November 2023, mortgage rates were nearing 8%. This last week, rates ad fallen to their lowest level since March 2024, and were at 6.8%. The next FED meeting is July 30-31 and many are hoping for a press conference that announces rate cuts for 2024.

"The 30-year fixed-rate mortgage fell 12 basis points from last week,” said Sam Khater, Freddie Mac’s Chief Economist. “Mortgage rates are headed in the right direction and the economy remains resilient, two positive incremental signs for the housing market.” Freddie Mac buys mortgages on the secondary market.

mortgage news daily mortgage graph

Graph from Mortgage News Daily

According to Freddie Mac, the rate fell to 6.77% from 6.89% last week, although it averaged 6.78% a year ago. After several weeks of reductions, refinances have begun to pick up. However, home buyers have yet to move from the sidelines.

For those waiting to see if rates will move lower, this is a possibility that may happen in September or November. “If the Fed makes any moves later this year, the signal would be sufficient for the mortgage market, and mortgage rates would start falling,” said Selma Hepp, chief economist at CoreLogic. “In that case, we could see the mortgage rates around 6.5% at the year-end.”

Bonds and Stocks

Mortgage rates are influenced by many factors, including the bond market response to the FED’s interest rate policy. Lower interest rates make bonds more appealing in the secondary market, and bond prices are currently rising.

Lenders also use the 10-year Treasury yield when pricing home loans. Jobs reports and inflation are used by the FED in determining a FED rate cut. Inflation has cooled and unemployment is rising, both factors that can lead to a FED reduction in rates.

Many financial markets are betting that the FED will cut borrowing costs at least two times in 2024. In an effort to curb inflation to their target rate of 2%, they have held its rate in the 5.25%-5.50% range over the last year. Markets are expecting their rate to drop to the 4.50%-4.75% range by the end of 2024. This is what could lead to a possible 6.5% mortgage rate.

Gold Prices

Gold prices too, moved higher this week, which generally happens when interest rates fall. Gold, like bonds, have an inverse relationship to interest rates. Gold markets too, are forecasting interest rates to drop in September.

Some investors are betting on three possible interest rate cuts by the end of the 2024. It is hard to say where interest rates will settle in such a volatile election year. As of today, however, interest rates in the 6.7% range should be enough to incite additional sales activity.

If you are considering buying a home, contact us today for more information on the current real estate market in Lake Tahoe and Truckee. Summer activity has remained strong, so if you are thinking of listing your home for sale, this is an excellent time to do so.

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