Future of Mortgage Rates: November witnessed a significant dip in 30-year fixed mortgage rates, but Fannie Mae’s deputy chief economist, Mark Palim, suggests that this decline might be temporary if the labor market continues to show strength. Despite a robust jobs report with the addition of 199,000 jobs in November and rising wages, Palim cautions that the figures may be somewhat inflated due to striking workers returning from the auto industry and Hollywood.
Homebuyers initially benefited from the nearly 80 basis point decline in mortgage rates since the end of October. However, Palim emphasizes that if the labor market sustains its strength, the pace of mortgage rate declines may not persist in the near term or could even partially reverse.
As of Friday, the benchmark 30-year fixed mortgage rate was inching down to 7.05%, following a surge to nearly 8% in October, as reported by Mortgage Daily News.
The prospect of lower mortgage costs driving increased home sales has boosted the shares of companies like Toll Brothers Inc. and other homebuilders tracked by the SPDR S&P Homebuilders ETF. This optimism persisted even as some investors in homebuilder bonds engaged in selling in recent weeks.
Yields on 10-year and 30-year Treasury notes experienced an uptick on Friday, reaching approximately 4.23% and 4.32%, respectively, but remaining below the October highs of about 5%. The surge in long-term borrowing costs was fueled by Federal Reserve officials’ firm stance on keeping rates higher for a longer duration to bring inflation down to a 2% annual target.
Despite these economic shifts, U.S. stocks showed resilience, with the Dow Jones Industrial Average, S&P 500 index, and Nasdaq Composite Index all posting gains in Friday’s afternoon trading, marking a positive response to the jobs report. The Dow Jones Industrial Average rose by 0.2%, narrowing the gap to its last record close set two years ago, while the S&P 500 and Nasdaq Composite Index also saw a 0.2% increase, according to FactSet data.
Also read: Mortgage Rates Stage Comeback: Sixth Week of Decline Hits 4-Month Low
Our Reader’s Queries
Will mortgage rates go down in 2023?
After a steady increase in 2022, mortgage rates remained elevated for a longer period than anticipated in 2023. However, experts in the real estate industry predict that rates will gradually decrease throughout 2024. This positive outlook is a relief for those looking to invest in the housing market.
Are mortgage rates expected to drop in 2024?
As inflation begins to ease, mortgage rates are predicted to drop gradually over the course of 2024. However, the process may be slow-moving. According to Realtor.com experts, the average rate for the year is expected to be around 6.8%, with a slight decrease to 6.5% by the end of the year.
What will the mortgage rate be in 2025?
Goldman Sachs predicts that 30-year mortgage rates will decrease to 6.3% by the close of 2024. Additionally, rates are expected to slightly decline to 6% in 2025 as the Federal Reserve begins to reduce interest rates.
How high will mortgage rates go in future?
It’s predicted that mortgage rates will decrease in 2024. Various forecasts for the housing market in 2024 suggest that 30-year mortgage rates may fall between 6.1% and 6.5% by the year’s end.