Last week, mortgage rates fell for the first time in a month, with the 30-year fixed mortgage rate reaching 7.09%.
Yahoo Finance’s Rebecca Chen reports:
Recent changes in interest rates, including a drop from 7.22% this week and a steady rise last month, are forcing some institutions to revise their mortgage outlooks for the remainder of 2024.
“An environment in which interest rates continue to hover above 7% impacts both sellers and buyers. Many potential sellers are still hesitant to list their homes and mortgage rates are lower than they were a few years ago. , which has a negative impact on supply and continues to drive home prices up,” said Sam Carter. Chief Economist at Freddie Mac. “These rising home prices further increase the overall affordability challenges faced by potential buyers in this high interest rate environment.”
Strong economic data and stubborn inflation have led housing experts to change their predictions for where interest rates will end in 2024.
Fannie Mae, the government-backed mortgage lender, raised its year-end forecast to 6.4% from 5.9% earlier this year.
“Our expectations include the Fed cutting rates by 25 basis points twice in the fall,” Douglas Duncan, Fannie Mae’s chief economist, told Yahoo Finance.
The Fed left the federal funds rate unchanged last week. Meanwhile, mortgage rates have risen more than 7% in the past three weeks, influenced by Fed data.
Duncan said the Fed’s preferred measure of inflation, the core personal consumption expenditures (PCE) index, would need to decline toward 2% for at least three consecutive months to reach or near the revised forecast. . The latest core PCE rose 2.8% in March compared to the same month last year.
The National Association of Realtors (NAR) now expects average interest rates to settle at 6.5% by the end of the year, revised from the 6.3% forecast at the beginning of the year.
“The Fed has been slow to cut interest rates,” said Lawrence Yun, NAR’s chief economist. “I thought rates would have been lower by now and they would have started cutting. Even if the Fed doesn’t cut rates this year, it will just be postponed to 2025. They called for a September rate cut. But let’s take a look.”
