30-year mortgage rates dipped below 7% last week for the first time since August and are now down over 100 basis points in the last two months.
Housing market supply will quickly recover if rates continue to fall at this current pace as the price is now becoming more affordable, compared to a peak of nearly 8% in late October this year. Borrowing costs in the US have eased for seven straight weeks as the Fed signalled for rate cuts.
The rate has been declining since its peak. Most major lenders and realtor organizations expect 30-year mortgage rates to move at the range between 6% and 7% in 2024.
The decrease in rates was deepened last week after the Fed’s dot plot also showed that most officials see rate cuts in 2024 with a median projection of three. However, the market expected to see about six cuts. The first cut could be as soon as March with a 70% chance, much higher than 30-50% prior to the meeting. There is also about a 20% chance that the Fed could cut interest rate by 25 basis points next month, according to CME FedWatch Tool.