Experts Predict Mortgage Rate Changes After September Fed Meeting

Experts predict that mortgage rates will unlikely fall significantly following the Federal Reserve’s expected rate cut in September. Market expectations largely influence mortgage rates, and experts believe that current rates already reflect the anticipated 25 basis point cut. 

According to Dr. Selma Hepp from CoreLogic, while the September cut is likely, future rate cuts will depend on economic factors like inflation and employment trends. Shmuel Shayowitz from Approved Funding Corp adds that mortgage rates have already adjusted to the expected rate cut, and further declines are not expected unless the Fed has a more aggressive outlook.

The future movement of mortgage rates will depend on how the job market evolves. If the job market weakens significantly, rates could fall more rapidly. Still, experts like Jeremy Schachter from Fairway Independent Mortgage Corporation believe mortgage rates are unlikely to drop much further in 2024. Buyers who are ready now may benefit from purchasing with less market competition, as waiting for lower rates could lead to higher home prices.

Ultimately, the decision to buy should be based on an individual’s financial readiness and the ability to afford homeownership comfortably.

4M Loans Expected to Refinance When Rates Hit 6%

As mortgage rates decrease and expectations for rate cuts rise by the end of 2024, lenders are preparing for a new wave of refinancing. CoreLogic’s analysis of 15.7 million first-lien mortgages found that many U.S. homeowners are either locked into low-rate mortgages or are “refinance burnouts,” meaning they’ve already taken advantage of lower rates in the past. By mid-August, 30-year fixed mortgage rates dipped from the mid-7% range to the mid-6% range, leading to a surge in refinance applications, doubling compared to last year. However, many loans are unlikely to benefit from further rate cuts due to already low rates or previous refinancing.

CoreLogic’s study shows that nearly half of the loans were originated between 2020 and 2022, when rates were historically low, making those loans less likely to refinance again. Only about 7.7% of loans, primarily from 2023 and 2024, stand to gain from a refinance if rates drop further. As of June 2024, approximately $735 billion in loan balances could benefit from a refinance if mortgage rates fall to or below 6%, potentially unlocking significant lending opportunities for lenders.