If you’ve been waiting for mortgage rates to drop, your patience is paying off. Since mid-July, the average 30-year fixed mortgage rate has fallen from 7 percent to around 6.2 percent by the end of September 2024. While this is encouraging news, rates may not fall much further in October, despite the Federal Reserve’s recent rate cuts.
The Fed’s benchmark rate was reduced on Sept. 18, marking its first cut since the pandemic. Though the Fed doesn’t directly set mortgage rates, it heavily influences them.
Refinance activity is already gaining momentum, and experts predict that further anticipated Fed rate cuts will boost refinance volume as borrowers with higher mortgage rates seize the opportunity to lower their monthly payments.
For instance, if you currently have a 6.4% rate on a $450,000 30-year fixed mortgage, your monthly payment is likely around $2,880. By refinancing to a 5.4% rate, your payment could decrease to about $2,600, saving you roughly $280 per month.
Mortgage rates have already seen a significant dip, with the 30-year loan averaging 6.24 percent as of late September 2024, according to Bankrate’s lender survey.
However, experts caution that rates may not drop as much as homeowners hope, as some anticipated the September rate cut.
Projections from Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors predict 30-year rates will hover between 6.2 and 6.7 percent through the end of the year.
Higher mortgage rates have kept many homeowners locked into their lower-cost loans, while home prices reached a record high of $416,700 in August 2024, according to the National Association of Realtors. This has led to more homeowners exploring refinancing options, particularly as rates continue to decline.
“Given the downward trajectory of rates, refinance activity continues to pick up, creating opportunities for homeowners to lower their monthly payments,” says Sam Khater, chief economist at Freddie Mac. At the same time, many potential homebuyers are playing a waiting game, hoping rates will drop further as more economic data becomes available.
The U.S. housing market requires additional Federal Reserve rate cuts to improve supply and affordability. According to Fitch Ratings (New York, 19 September 2024), while these cuts will ease some of the strain on the market, mortgage rates are not expected to dip below 5.0% until at least 2027.
If you’re in the market for a mortgage or considering refinancing, here are some key steps you can take to secure the best deal:
As we enter October 2024, mortgage rates are likely to fluctuate, but the changes may be moderate. If you’re considering refinancing or securing a new mortgage, reach out to Promise Home Loans today for personalized guidance and to secure your mortgage loan.
We’re here to help you succeed in today’s market!
