Zillow economists warn that 7% mortgage rates could become the new normal, Kevin Mahn, president and CIO of Hennion & Walsh Asset Management, said on The Big Money Show I reacted to that.
Fannie Mae raised its outlook for mortgage rates just a month ago, saying rates will remain high for longer than previously thought and fewer homes will be sold in 2024 than expected.
The government-backed group predicted in February that the average interest rate on a 30-year fixed mortgage would fall below 6% by the end of the year and rise to 5.9% in the fourth quarter.
Currently, Fannie Mae expects interest rates to increase by 0.5% (to 6.4%) by the end of this year, remain above 6% for two more years, and gradually decline to level off at 6% by the fourth quarter of 2025. I predict that it will.
“For Sale” outside a home in Hercules, California on May 31, 2022. (David Paul Morris/via Bloomberg/Getty Images)
The latest data from Freddie Mac shows the average rate for a person. 30 year fixed mortgage Currently it is about 6.74%. After peaking at 7.79% in late October, interest rates fell steadily until mid-January, then reversed and started rising.
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Interest rates have fallen slightly over the past few weeks, but economists don’t expect them to fall significantly anytime soon. “There’s a good chance that interest rates will remain high for an extended period of time in this environment,” Sam Cater, chief economist at Freddie Mac, said last week.
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Doug Duncan, Fannie Mae’s senior vice president and chief economist, said in a statement announcing the expected rise in mortgage rates, “The housing market will continue to face the dual challenges of rising home prices and rising interest rates in 2024.” “We will continue to face affordability constraints.”
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“Better-than-expected inflation data and strong payrolls could put more upward pressure on mortgage rates this year than previously expected as markets continue to evolve their expectations for future monetary policy,” Duncan said. is high,” he explained.
October 28, 2022, Trapp, Maryland Housing Development. (Jim Watson/AFP via Getty Images)
He added: “Still, while we do not expect the supply of homes for sale to increase dramatically, we do expect the level of market transactions to increase compared to 2023, even if mortgage rates remain high. “I have,” he added.
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Fannie Mae said changes in its mortgage rate outlook were the primary driver of the downward revision to its total home sales forecast. The organization currently projects 2024 home sales to be 5 million to 4.91 million, and 2025 home sales to be 5.54 million to 5.4 million.
