30-year fixed mortgage rate projections

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1. ~60% of metro areas posted home price gains in Q2 2023

The second quarter of 2023 brought mixed signals to the U.S. housing market, with almost 60% of metro areas (128 out of 221) posting home price gains, according to the National Association of Realtors’ latest quarterly report.

The national median single-family existing-home price declined by 2.4% to $402,600, compared to a year ago. Mortgage payments on a typical existing single-family home with a 20% down payment grew to $2,051, marking an increase of 11.6% from last year. LINK

2. Fed rate cuts are coming in Q2 2024, Goldman Sachs

Goldman Sachs economists are penciling in US rate cuts beginning in the second quarter of 2024, followed by a gradual, quarterly pace of reductions.

While the Federal Reserve will want to normalize interest rates once inflation is closer to target, policymakers won’t need to do this with urgency, the economists said. The Fed’s highest interest rates in 22 years have successfully helped calm price pressures but have yet to tip the US into a recession many economists once thought was inevitable. LINK

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3. 30-year fixed mortgage rate projections

While predicting future mortgage rates remains challenging, and recent forecasts have often missed the mark, here’s where 8 leading research firms expect rates in Q4 2023 and beyond.

• The MBA: The trade group projects that the 30-year fixed mortgage rate will average 5.9% in Q4 2023. Beyond this year, the group expects mortgage rates to slide to 4.9% by Q4 2024.

• Morningstar: Economists at Morningstar project that the average 30-year fixed mortgage rate will average 6.25% in 2023, 5.0% in 2024, and 4.0% in 2025.

• Goldman Sachs: The investment bank projects that the 30-year fixed mortgage rate will end 2023 at 6.4%. In 2024, Goldman Sachs expects the 30-year fixed mortgage rate will average 5.9%.

• The National Association of Realtors: Economists at NAR forecast that the 30-year fixed mortgage rate will slide to 6.4% before the end of 2023, and then to 6.0% in 2024.

• Morgan Stanley: The Agency MBS strategists at Morgan Stanley project that the 30-year fixed mortgage rate will start 2024 at 6.0%.

• Moody’s Analytics: The financial intelligence arm of Moody’s still projects that the 30-year fixed mortgage rate will average 6.5% through most of 2023.

• Realtor.com: Economists at the home listing site believe the 30-year fixed mortgage rate will start 2024 at 6.1%.

• Fannie Mae: Economists at Fannie Mae forecast that the 30-year fixed mortgage rate will average 6.6% in Q4 2023. Then Fannie Mae expects mortgage rates to grind down to an average of 5.9% in Q4 2024. For the calendar year, Fannie Mae expects mortgage rates to average 6.1% in 2024.

4. More Nuggets

🔔 Better.com's long-awaited IPO plan approved. (TechCrunch)

🤖 How mortgage AI chatbots stack up against ChatGPT. (NMN)

🧑‍⚖️ loanDepot settles class action lawsuit for $3.5M. (NMP)

5. Western Asset Mortgage merges with AG Mortgage

AG Mortgage Investment Trust, a residential mortgage REIT controlled by Angelo, Gordon & Co., clinched a definitive merger deal with Western Asset Mortgage Capital.

Under the agreement, AG Mortgage will offer $10.11 in stock and $1.12 in cash for each Western Asset share. This totals a value of $11.23 per share, representing a 34% premium over Western Asset’s NYSE closing price on July 12.

Due to this, Western Asset nullified its earlier acquisition agreement with Terra Property.

☀️ See you on Wednesday!

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