The Light at the End of the Tunnel: #MBAIMB24

(MBA Vice President of Industry Analysis Marina Walsh, CMB)

NEW ORLEANS–There is light at the end of the tunnel, MBA Vice President of Industry Analysis Marina Walsh, CMB, told attendees here at MBA’s Independent Mortgage Bankers conference.

“Keep going; stay resilient,” Walsh said, noting some very good indications from the Federal Reserve. “It looks like they are about done in terms of raising the fed funds rate. We expect the fed funds rate to hold steady until the second quarter, when we’ll likely see a cut”

Walsh noted 2024 is an election year. “So we’ll see when the remaining rate drops are going to take place,” she said. “Based on our MBA forecast, right now, we expect three fed funds rate cuts this year.  Also, we need to take into account what could be happening with the Fed’s balance sheet. The Fed has mortgage-backed securities and Treasuries that have been running off and that potentially could slow down this year, also.”

Walsh said MBA anticipates rates could fall to as low as 6.1% this year and get into the 5.5% to 5.6% range by the end of 2025. “That’s our anticipation now,” she said.

The 30-year fixed rate has come down fairly substantially over the last few months–more than 100 basis points, Walsh said. “But if you look at refinances, we’re at a pretty low point in terms of refi activity,” she added. “You have this whole group of folks with very, very low mortgage rates who are not going to want to refinance. Where we see the most potential in refinancings right now is in cash-out refis.”

Turning to purchase mortgages, “we have some good news,” Walsh said. “Housing starts are moving forward. Based on MBA’s  Weekly Application Survey, we have seen the good news in terms of a week-over-week increases. But we were coming from a very low place.”

MBA forecasts that purchase mortgage applications will continue upward, “So, we’re seeing the light at the end of the tunnel,” Walsh said.