How did mortgage rates react a day after the rate pause?
The national average rate for a 30-year, fixed-rate mortgage ended the day down 0.20% to 6.62%*. The national average rate for a 30-year, fixed rate mortgage has fallen over 0.40% since Wednesday’s announcement from the Federal Reserve.
The question that market watchers are currently asking is, “Is this the start of a big rally or are we headed for a correction?” We’ll have to wait and see how the market reacts to such a dramatic move downward and future data points will also serve as a guide for where the market will go.
Refinance demand jumps
According to the latest reports from the Mortgage Banker’s Association, applications to refinance a home loan jumped 19% when comparing last week’s data to the previous week. Refinance demand was 27% higher than it was a year ago and may continue to increase into the New Year if mortgage rates stay where they are or tick lower.
MBA senior vice president and chief economist Mike Fratantoni, said, “Borrowers who had seen rates near 8% earlier this fall are now seeing some lenders quote rates below 7%. Refinance volume picked up in response to this drop in rates, with a particularly notable increase for FHA and VA refinance applications.”
Goldman Sachs offers predictions for 2024 housing market
While mortgage rates have started to cool off, what will happen for the housing market in 2024? Investment bank Goldman Sachs offered its prediction for housing prices in 2024 and beyond this past week.
Experts at the investment giant estimate that home prices will increase 0.6% nationally in 2024 before starting to cool off more dramatically in the following years.
The team at Goldman Sachs expects the number of new homes on sale in the U.S. to progressively increase in the coming years. They predict 723,000 new units to hit the market in 2024, 771,000 in 2025, and 781,000 in 2026.
* National average rates accurate as of 12/14/23 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.
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