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Market Update - May 20, 2024

Monday, May 20, 2024

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. Polly data is calculated using actual locked rates. Rates are inclusive of locks that occur below par, at par and therefore consider discounts and rebates.

Market Commentary:

For the week of May 10th to May 16th, interest rates remained unchanged. Mortgage rates are tied to inflation. In a bit of good news, inflation is cooling down slightly. The U.S. Labor Department said on May 15th that the inflation rate had dipped to 3.4 percent. That news heartened investors, but it's unclear whether the Federal Reserve will cut rates any time soon. The central bank left rates unchanged in May — and the latest numbers show inflation is still well above the Fed's target of 2 percent.

Mortgage rate forecasts:

Fannie Mae, the Mortgage Bankers Association and National Association of Realtors predict that mortgage rates will drop over the next 12 months for purchase transactions. Refinances and Cash-out refinance transactions will be higher.

Fed Watch:Target rate (in bps) possibilities, according to the CME Group:

Market Review:

Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 85.34% for purchase transactions, 10.21% for cash-out refinances, and 4.46% for rate and term refinances.

Per Black Knight 50.66% of all Retail loan production were Government Loans (FHA, VA, USDA), while 49.35% were Conventional and Non-Conforming loans.

Lotsa Lock

Recent research shows that for every percentage point that mortgage market rates exceed the rate currently enjoyed by the homeowner, the probability of sale is reduced 18.1%. This led to a 57% reduction in home sales with fixed-rate mortgages in 23Q4, and a reduction of 1.33 million sales between 22Q2 and 23Q4. The supply reduction boosted home prices 5.7%, outweighing the impact of higher rates, which reduced prices by 3.3%.- Elliot Eisenberg, Ph.D. , Economist

We've got you covered.

As you've surely heard by now, Freddie Mac and Fannie Mae have clarified guidelines on buyer-side real estate agent commissions following the recent NAR settlement. Save this graphic* for a handy reference to the updated seller concession guidelines.  

News You Can Use

*This information is provided for informational purposes only and does not constitute legal, tax, or financial advice. All first mortgage products are provided by Edina Realty Mortgage. Not all mortgage products may be available in all areas. Not all borrowers will qualify.
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