Mortgage rates
The yield on ten-year government bonds rose to more than 4.7% mid-morning on Thursday, following news that the US economy grew by only 1.6%, while inflation rose by 3.7%.
The 30-year fixed-rate mortgage rose 7 basis points to 7.17% on April 25, up from 7.1% the week before and 6.43%
Meanwhile, the 15-year FRM rose to 6.44% from 6.39% in the week of April 18. For the same week in 2023, the average for this loan product was 5.71%.
“Although interest rates have risen more than half a percent since the first week of the year, purchasing demand remains stable,” said Sam Khater, chief economist at Freddie Mac, in a press release.
“As rates remain higher for longer, many homebuyers are adjusting, as evidenced by this week’s report that new home sales saw the largest increase since December 2022.”
Freddie Mac’s April 14 housing outlook release claimed that housing demand is making a healthy recovery compared to last year, with purchase applications for 30-year FRMs up 8% compared to the same period last year, even as average mortgage rates and average sales price have increased , according to data from the Loan Product Advisor.
“First-time homebuyers continue to support demand this year as they make up nearly 6 of 10 purchase applications,” the post said. “Nevertheless, the average repayment (principal and interest) is 7% higher than the same period last year, which remains a significant headwind as affordability remains at an all-time low.”
Late Thursday morning, the 30-year FRM was at 7.457%, according to information from LenderPrice on the National Mortgage News website. Last week it was 39 basis points lower, at 7.067%.
While the average rate on Zillow’s tracker rose 1 basis point to 6.96% mid-morning Thursday, compared to Wednesday it was 5 basis points lower than the previous week’s average of 7.01%.
Following speeches from Federal Reserve officials last week, financial market participants have adjusted their expectations for economic growth, inflation and policy, said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement issued Wednesday evening.
“Expect more interest rate volatility as the Fed and investors wait for more convincing evidence of a return to low, stable and more predictable inflation,” Divounguy said. “The [personal consumption expenditures] This week’s inflation report is likely to trigger major repricing activity.”
Fannie Mae’s mortgage forecast for April now calls for an average mortgage rate of 6.6% in 2024 and 6.1% in 2025. “However, interest rates remain volatile, especially given changes in Fed policy expectations, adding risks to our prospects,” said a blog post. noted.
Primarily due to more optimistic expectations for home price growth and slightly lower mortgage rates, Fannie Mae now expects purchasing volume to reach just under $1.4 trillion in 2024, for a total of just under $1.4 trillion.
Refinancing volume should end at $415 billion this year and $657 billion in 2025.
The Mortgage Bankers Association, on the other hand,
In fact, the PCE report was “surprisingly strong,” MBA deputy chief economist Joel Kan said in a statement issued after the GDP release.
“However, this persistence in higher-than-desired inflation will not give the Fed a rush to cut rates,” Kan said. “As indicated in our April forecast, we expect possibly two rate cuts in the second half of this year.”