Mortgage rates continued to tumble closer to the 6% mark, even before taking into account the full impact of
But the Fed's actions shouldn't start an origination uptick for the mortgage industry, according to one long-time veteran.
"The last three months of
Yields on the 10-year Treasury were up nearly 6 basis points at noon Thursday from their close the previous day, to 3.74%. Since Monday, the yield has increased by 12 basis points.
Yet the 30-year fixed rate mortgage fell by 11 basis points to 6.09% on Sept. 19
The 15-year FRM averaged 5.15%, down from 5.27 last week and 6.54% a year ago at this time.
"While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market," said Sam Khater, chief economist at Freddie Mac, in a press release. "Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity."
Cohn also expects mortgage rates to fall through the rest of 2024 but they won't decline by as much as people would like.
"Long-term mortgage rates will fall if economic data indicates a weakening economy," Cohn said. "Employment numbers will be key."
Other trackers found rates have increased.
Zillow's rate tracker found rates climbed 5 basis points between Wednesday and noon on Thursday to 5.68%. That is 1 basis point lower than last week's average of 5.69%.
"For those ready to buy a home, waiting for rates to drop even further carries some risk," said Orphe Divounguy, senior economist at Zillow Home Loans in a statement issued Wednesday afternoon.
"Mortgage rates aren't expected to fall much further. That's partly because the central bank is no longer a buyer of mortgage debt," Divounguy added.
He pointed to Federal Reserve Chairman Jerome Powell's comments that its holdings of Treasurys and mortgage-backed securities
The Fed's actions don't "guarantee a steady fall for mortgage rates as we look ahead," Divounguy said. "Expectations for further rate cuts are already priced in, and if the Fed under-delivers as new data comes in, mortgage rates could rise again."
However,
While the Fed actions will help the housing market, it will be limited because mortgage rates will not fall below 5% before 2027, Fitch Ratings said.
"We expect the 10-year yield will not fall much further than its current level of around 3.70% to end 2026 at 3.50%," a Fitch report said. "A 3.50% 10-year Treasury yield plus the historical average spread of 1.8 percentage results in a 5.20% mortgage rate."
Right now the spread is about 260 basis points. "A further decline in mortgage rates will help improve affordability and support demand, but low inventory will likely constrain home sales until rates move closer to 5.00%," Fitch said.
