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Will Mortgage Rates Decline in the Next 90 Days?

In this article, we’ll explore the latest predictions for mortgage rates over the next 90 days. After a period of volatility in the first half of the year, experts are now predicting a more stable environment for mortgage rates over the next 90 days. This forecast is based on recent economic indicators, Federal Reserve policy expectations, and overall market sentiment.

Mortgage Rates Forecast for Next 90 Days

Current Market Overview

The year 2024 began with high hopes for rate cuts, but these expectations were quickly tempered as inflation proved more persistent than anticipated. However, recent data suggests a potential easing of inflationary pressures, which could pave the way for more favorable mortgage rates in the coming months.

Key points:

  • Inflation appears to be leveling off
  • The Federal Reserve’s policy stance remains crucial
  • Economic indicators show signs of slowing growth

Projected Rate Range

Based on expert analysis, the average rate for a 30-year fixed-rate mortgage is expected to fluctuate within the following range over the next 90 days:

  • Low End: 6.66%
  • High End: 7.08%

This forecast suggests a slight improvement from the recent peak of 7.22% seen in early May 2024. However, it’s important to note that rates are not expected to drop dramatically, as several factors continue to influence the market.

Factors Influencing the Forecast

Federal Reserve Policy
The Federal Reserve’s monetary policy remains a critical factor in determining mortgage rates. While the Fed doesn’t directly set mortgage rates, its decisions on the federal funds rate significantly impact the overall interest rate environment.

  • The Fed is currently navigating cross-currents in the economy
  • A waiting game for clearer economic signals is expected this summer
  • Rate cuts are possible but not guaranteed in 2024

Inflation Trends
Recent inflation data has shown some improvement, with the May Consumer Price Index (CPI) report offering a hopeful sign. However, more consistent data will be needed to convince the Fed to consider rate cuts.

Economic Growth and Labor Market
The pace of economic growth and the state of the labor market will play crucial roles in shaping mortgage rate trends:

  • The economy has shown signs of slowing, but remains resilient
  • Labor markets are looser but not yet at levels desired by the Fed
  • A consistent trend of below-potential growth may be necessary for significant rate declines

Short-Term vs. Long-Term Rates

While the focus is often on 30-year fixed-rate mortgages, it’s worth noting the forecast for adjustable-rate mortgages (ARMs) as well. The 5/1 ARM is expected to range between 6.28% and 6.68% over the next 90 days.

This relatively small differential between ARMs and 30-year fixed rates may limit the appeal of adjustable-rate products for many borrowers.

Potential Scenarios

Best-Case Scenario
If economic data aligns perfectly with the Fed’s goals over the next few months, we could see:

  • Inflation continuing to cool
  • Economic growth moderating to a sustainable pace
  • Labor markets showing increased slack

In this case, mortgage rates could trend towards the lower end of the forecast range, potentially even testing the 2024 low of 6.6% by the end of the 90-day period.

Worst-Case Scenario
Conversely, if economic indicators surprise to the upside or inflation proves stubborn:

  • Rates could remain elevated near the top of the forecast range
  • The possibility of rates exceeding 7.08% cannot be ruled out entirely
  • Expectations for Fed rate cuts in 2024 could be pushed back

Implications for Homebuyers and Refinancers

For those considering a home purchase or refinance in the next 90 days:

  • Rates are expected to remain relatively stable, offering a window of opportunity
  • While not at historic lows, current rates are more favorable than recent peaks
  • The limited spread between fixed and adjustable rates may make fixed-rate mortgages more attractive for most borrowers

Looking Beyond the 90-Day Horizon

While this forecast focuses on the next three months, it’s important to consider the longer-term outlook:

  • The potential for Fed rate cuts later in 2024 or early 2025 could lead to more significant mortgage rate declines
  • Economic uncertainties and geopolitical factors could still cause unexpected rate movements
  • The definition of “normal” mortgage rates may be evolving in the post-pandemic economy

The mortgage rate forecast for the next 90 days suggests a period of relative stability with a slight downward bias. While dramatic rate drops are unlikely, the potential for modest improvements exists if economic data continues to trend favorably. Prospective homebuyers and refinancers should closely monitor market conditions and consult with financial professionals to make informed decisions based on their individual circumstances.

Will Mortgage Rates Go Down in August 2024?

For August 2024, homebuyers and homeowners alike are keenly watching mortgage rate trends. After a tumultuous period in the housing market, many are hoping for some relief in the form of lower interest rates. Let’s dive into what experts are predicting for mortgage rates in the coming month.

Before we look at the August forecast, it’s important to understand the recent market conditions:

  • Mortgage rates have been volatile in recent years, with significant fluctuations throughout 2023
  • The Federal Reserve’s ongoing fight against inflation has been a major factor influencing rates
  • Economic uncertainties, including potential recession fears, are impacting market predictions

Expert Predictions for August 2024

Several industry experts have weighed in on the direction of mortgage rates for August. Here’s a summary of their forecasts:

Molly Boesel, Senior Principal Economist at CoreLogic
Prediction: Rates will moderate
Boesel anticipates that the 30-year mortgage rate will remain in the high-6% range in August. She cites positive inflation news but notes that significant drops are unlikely until monetary easing begins.

Ralph DiBugnara, President at Home Qualified
Prediction: Rates will moderate
DiBugnara expects rates to stay around the same range seen through July. He predicts:

  • 30-year fixed rate to average 7%
  • 15-year fixed rate at 6.75%

He anticipates no major changes before the September Fed meeting.

Ralph McLaughlin, Senior Economist at Realtor.com
Prediction: Rates will decline
McLaughlin is more optimistic, suggesting a slow decline in mortgage rates throughout the rest of the year. He projects rates could potentially reach the 6.4%-6.6% range.

Odeta Kushi, Deputy Chief Economist at First American
Prediction: Rates will decline
Kushi also foresees a decline, citing recent positive inflation news and a cooling labor market. She suggests the possibility of gradual declines in mortgage rates if incoming data supports a more dovish Fed stance.

Factors Influencing August Rates

Several key factors will play a role in determining mortgage rates for August:

  • Federal Reserve Policy: The Fed’s decisions on interest rates significantly impact mortgage rates. Expectations of potential rate cuts are already exerting downward pressure on rates.
  • Inflation Data: Recent positive inflation news has increased optimism for lower rates. Continued improvement could lead to further declines.
  • Labor Market Conditions: A cooling labor market could support the case for Fed rate cuts, potentially leading to lower mortgage rates.
  • Economic Growth: Signs of a slowing economy may contribute to a downward trend in rates.

Potential Scenarios for August

Based on expert predictions and market factors, we can outline two potential scenarios for August:

Moderate Decline Scenario
Rates could see a slight decrease, potentially settling in the high 6% to low 7% range
This aligns with the more conservative predictions from experts like Boesel and DiBugnara

Optimistic Decline Scenario
Rates could experience a more noticeable drop, possibly approaching the mid-6% range
This scenario reflects the more positive outlooks from McLaughlin and Kushi

Implications for Homebuyers and Homeowners

For those considering a home purchase or refinance in August:

  • A potential decline in rates could improve affordability
  • Even small rate decreases can result in significant savings over the life of a loan
  • Those who secure a mortgage in August may have the opportunity to refinance if rates continue to drop in the future

Looking Beyond August

While the focus is on August, it’s worth noting that many experts anticipate a general downward trend in mortgage rates throughout the remainder of 2024. Factors supporting this outlook include:

  • Expectations of Fed rate cuts later in the year
  • Gradually cooling inflation
  • Potential economic slowdown

Mortgage Rate Predictions for 2024

As of July 18, 2024, the 30-year fixed-rate mortgage averaged 6.77%, according to Freddie Mac. This represents a decrease from the previous week’s rate of 6.89% on July 11. The 15-year fixed mortgage rate also saw a decline, dropping from 6.17% to 6.05%.

These recent movements indicate a slight easing in the mortgage market, but what do experts predict for the rest of the year?

Expert Predictions for Q3 2024

Several major housing authorities have provided their forecasts for the average 30-year fixed interest rate in the third quarter of 2024. Here’s a breakdown of their predictions:

  • Wells Fargo: 6.77%
  • Fannie Mae: 6.80%
  • Mortgage Bankers Association: 6.80%
  • National Association of Home Builders: 6.85%
  • National Association of Realtors: 6.90%
  • Average Prediction: 6.82%

Analysis of Predictions

Lowest Forecast: Wells Fargo
Wells Fargo stands out with the most optimistic prediction, forecasting that rates will hold steady at the current level of 6.77%. This suggests they anticipate minimal movement in rates through Q3.

Highest Forecast: National Association of Realtors
At the other end of the spectrum, the National Association of Realtors predicts a slight increase to 6.90%. While this is the highest forecast, it still represents a relatively modest rise from current levels.

Consensus View
The average prediction across all five authorities is 6.82%, indicating a general expectation of stability with a slight upward bias. Both Fannie Mae and the Mortgage Bankers Association align with this consensus, predicting 6.80%.

Implications for Homebuyers and Homeowners

  • Relative Stability: The narrow range of predictions (6.77% to 6.90%) suggests experts anticipate a relatively stable mortgage rate environment in Q3 2024.
  • Slight Upward Pressure: With four out of five predictions above the current rate, there’s a general expectation of a modest increase in rates.
  • Planning Opportunity: The forecasted stability provides a window for potential homebuyers to plan their purchases without the pressure of rapidly rising rates.
  • Refinancing Considerations: For existing homeowners, the predicted rates may not offer significant refinancing opportunities unless their current rate is substantially higher.

Factors Influencing Rate Predictions

Several factors likely contribute to these forecasts:

  • Economic Growth: Expectations of moderate economic growth may be keeping rate predictions in check.
  • Inflation Outlook: Projections for inflation in the coming months play a crucial role in rate forecasts.
  • Federal Reserve Policy: Anticipated actions (or inaction) from the Fed regarding interest rates significantly influence mortgage rate predictions.
  • Housing Market Dynamics: The balance of housing supply and demand can impact mortgage rate trends.

Looking Beyond Q3

While these predictions focus on Q3 2024, it’s important to consider the longer-term outlook:

  • Some experts anticipate potential rate decreases later in the year or in 2025, depending on economic conditions.
  • The possibility of a recession could lead to more significant rate drops in the future.

In conclusion, the mortgage rate forecasts for the next 90 days, August 2024, and Q3 2024 suggest a period of stability with potential for slight declines. Homebuyers and homeowners should stay informed about market conditions and consult with experts to make informed decisions regarding their mortgage needs.

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