This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
For the week of Oct 6th – Oct 12th, 30-year and 15-year interest rates decreased.
Key economic data releases, including the Producer Price Index and Consumer Price Index, will be in the spotlight as analysts look for signs of moderating inflation. A decrease in inflation could further substantiate the Federal Reserve's current dovish position, possibly delaying additional rate hikes.
These indicators are important metrics for assessing the health of the economy and hold significant influence over policy decisions at the Federal Reserve and other central banks around the world. A falling inflation rate could ease the pressure on the Federal Reserve to increase rates, potentially extending the pause in rate adjustments.
Several Federal Reserve officials have expressed concerns about tightening financial conditions and the potential impact of rising Treasury yields. These concerns may serve as a catalyst for the Federal Reserve to maintain the current interest rates.
"We think the Fed is done" raising interest rates, says Gene Goldman, chief investment officer at Cetera Investment Management. Goldman cites declining inflation and the pullback in the stock market and rising bond yields as reasons for his assessment.
"It really is not going to matter if we have a recession or not," he adds, suggesting that any downturn would be relatively mild and that certain sectors, such as manufacturing, are already on the path to recovery.
In a positive development, some recent indicators of economic growth have exceeded expectations. The September jobs report, released this past Friday, showed the creation of 336,000 new jobs, far surpassing the forecasted 170,000. Concurrently, the rate of wage growth appears to be stabilizing.
Mortgage Rate Forecasts Through Mid-2024
Fannie Mae and the Mortgage Bankers Association predict that mortgage rates will fall next year, but they disagree about the fourth quarter of 2023.
Fed Watch: Looking ahead, all eyes are now on the upcoming November 1st Federal Open Market Committee (FOMC) meeting. According to the CME Group, 10.0% of forecasters predict an increase in interest rates, while 90.0% predict rates will remain the same. None of the forecasters expect rates to decrease.
Market Review:
Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 85.78% for purchase transactions, 12.21% for cash-out refinances, and 2.01% for rate and term refinances.
News You Can Use
- Uptick in adjustable-rate mortgage demand helps push overall loan applications up slightly: MBA
- Mortgage Applications Increase in Latest MBA Weekly Survey
- Real Estate Rollercoaster: New Home Listings Rise Amid High Mortgage Rates
- More people turning to FHA loans amid rising mortgage rates
- How High Mortgage Rates Are Shaping Fall's Housing Market—and Why Buyers Have a Surprising Edge
- Federal Reserve's Dovish Stance Signals a Pause in Rate Hikes: A New Epoch?
