Mortgage Rates Spike Again After A Brief Drop

by Gemma Peterson

Mortgage Rates Spike Again After A Brief Drop

Fed Rate Cuts Had Minimal Impact on Mortgage Rates

The 30-year fixed-rate mortgage rates had hit 6.09% in the week ending on September 18 in response to the Fed rate cut. This sparked hope in many prospective home buyers.

Unfortunately, current trends have taken a turn for the worse. The 30-year fixed-rate mortgage rates have increased consistently for three consecutive weeks. The 30-Yr FRM is at 6.54% and the 15-Yr FRM is at 5.71% as of October 24.

What Do Mortgage Industry Experts Believe?

Mortgage industry experts believe that the 50 bps rate cut was already included in the prevailing mortgage rates. They believe the Fed is unlikely to cut rates further this year, given the strong economy and jobs market. The mortgage industry experts believe:

Fed is around 94% likely to cut rates by 25 bps in November and 86% likely to cut rates by 25 bps in December.
These small cuts won’t be enough to spur loan and refinance demand.
The Fed rate would end up being in the rate of 4.25% to 4.5%, which isn’t neutral enough to have a significant impact on mortgage rates.

Impact of High Mortgage Rates

Higher mortgage rates have already impacted application rates. According to the Mortgage Bankers Association, the number of applications sank by 17% in the week ending Oct 11. Refinance also dropped by 26% and the share of refinance applications fell below 50%.

All trends indicate that mortgage rates are unlikely to drop significantly in 2024.