Rate Forecast: Are Lower Mortgage Rates Ahead?

Will the FED lower rates in Mid September? And by how much? The next FOMC meeting will take place on September 17-18, 2024.

If you’re a mortgage agent, these promise to be some lucrative times ahead as the refinancing wave begins. Actually, it’s already started and the banks and secondary lenders are seeing more applications.

Everyone’s starting to get excited, especially buyers, many of whom are desperate to own a home and move in. Millions of renters have been dreaming of that day too. And as rates decline over the next two years, a lot of both buyers and lockedin sellers will be elated. Some may be too late as foreclosures are increasing.

Likely, they’ll drop rates by a small amount in September, but it’s unlikely to be a huge drop during 2024 given the continued strength of the US economy and given there is some major elections in November. The housing market in particular is the most stubborn source of inflation, and awakening that market might be self-defeating as far as the FED is concerned.

Trading Economics Fed Rate Forecast

Trading Economics’ economists believe the FED rate will drop to 3.25% in 2026. In the next two years, there will be tens of millions of renegotiated/refinanced mortgages as their current ones come due.

Your attention and other buyers too will soon turn to mortgage rates and finding willing loan providers at the new lower rates expected. Experts suggest the housing market will boom once a 2% Fed rate reduction is reached.

Stats show mortgage rates have been on the down trend for 2024 with no thanks to the FED.  Freddie Macs best rate is 6.49% for a 30 year fixed mortgage.  At 6.49%, with 20% down, a monthly mortgage payment on a home with a price of $400,000 would be $2,021. Yet, if it was a 10% down payment, the typical payment would then be $2,273.

And the 15 year fixed rate mortgage offered at 5.66%. Your monthly mortgage payment for a 15-year fixed-rate mortgage at 5.66%, with a $400,000 home price and a 20% down payment, would be approximately $2,641.92.

The new rates when they actually occur will begin a process of bringing homes back to the market and sales will likely climb while prices will likely fall. But that equation is one that’s puzzling for many housing economists as few are posing their own sales and price forecasts. More mortgage enabled buyers means more demand which raises bids and can raise sales prices. However, if more homes flood the market due to expectations of big price drops (FOMO sellers fearing not getting a good price).

Bank of America Mortgage Rates

As of August 21, 2024, Bank America posted its available rates:

Is this fall a good time to buy a house? Likely not, yet it’s certainly a good time to sell your home.

Mortgage Refinancing Trend

Mortgage refinancing is hot right now in August as more mortgage holders are forced to refinance, and as some homeowners are able to sell their homes.

Good luck with your mortgage refinancing or new mortgage application. Take heart that the economic and financing nightmare may be behind us (if the elections go well).