Introduction to the Week’s Mortgage Market

As November 25, 2024, unfolds, the mortgage market finds itself in a period of reflection and anticipation. With the Federal Reserve’s next meeting scheduled for December, the current week offers a brief reprieve amid the typical slowdown associated with Thanksgiving. While activity may seem subdued, there are still crucial economic indicators, Federal Reserve policies, and seasonal trends shaping the market landscape.

This is the perfect time for mortgage loan originators and home buyers alike to assess the state of the market and prepare for what’s ahead. Let’s dive into the current mortgage environment, covering rate trends, economic influences, and what you can expect moving forward.

Current Mortgage Rate Trends

Mortgage rates continue to hover at elevated levels, maintaining an air of unpredictability even as the broader market begins to stabilize. Per the discussion in the recent meeting, the following rates have been observed as of November 22, 2024:

• 30-Year Fixed Mortgage Rates: Averaging 7.03%.
• 15-Year Fixed Rates: Coming in at approximately 6.4%.
• FHA Loans: Averaging 6.45% for a 30-year term.
• VA Loans: Slightly lower at 6.47%, offering some of the most competitive rates.
• Jumbo Loans: Topping the charts at 7.25%.

This data reflects a lending market still grappling with the effects of persistent Federal Reserve rate hikes earlier in the year, with rates currently maintaining a 2-3% spread above the federal funds rate. However, the market saw a rare and surprising 30 basis point drop last week—a welcome reprieve during what is typically a stable or increasing period heading into Thanksgiving week.

While the drop may spark optimism, market participants are reminded to view it as a possible outlier given the historical trend of rate stabilization during holiday periods.

Economic Indicators Impacting Mortgage Rates

Several economic indicators are influencing the mortgage rate landscape this week. The Federal Reserve’s ongoing hold on rate hikes and upcoming key data releases will play significant roles in market dynamics. Here’s what we know:

• Upcoming Economic Reports:

• New Home Sales: Releasing this week and known to be a reliable housing market gauge.

• GDP Data: Expected later in the week and anticipated to reflect modest growth, which could stabilize rates.

• Jobless Claims: Coming on the heels of steady unemployment metrics, helping define labor market strength.

• Inflation Data: The Consumer Price Index (CPI) from mid-November indicated a modest 0.2% rise, with shelter costs contributing to inflationary pressure.

Given these factors, mortgage professionals and homebuyers should keep a close watch on the November 29 release of Q3 GDP growth data, which could steer interest rate expectations in the short term.

Seasonal Effects on the Mortgage Market

The Thanksgiving holiday typically ushers in a quieter period for mortgage markets. However, seasonal trends this year may differ slightly due to economic conditions and underlying botom-line optimism around rate stabilization:

• Historical Trends: In previous years, rates have either stayed steady or spiked briefly going into Thanksgiving week as lenders anticipate low-volume activity. Markets generally resume typical volatility in early December.
• This Year’s Outlook: The unexpected 30 basis point drop prior to Thanksgiving contrasts with historical norms, which could buoy optimism heading into December.

Mortgage loan originators should take advantage of this stability to encourage undecided buyers and refinancers to act before uncertainty resumes in December.

Key Seasonal Considerations:

• Decrease in mortgage applications and activity during Thanksgiving week.
• Holiday spending pressures may affect personal budgets for buyers.
• Temporary seasonal jobs may offer a short-lived income boost for potential buyers.

Regional Housing Market Overview

For New York-based mortgage professionals, understanding the regional housing market is essential. Several counties present distinct trends reflecting broader market dynamics:

• Brooklyn: Tight inventory continues to push prices upward, with median sales hovering around a 3% year-over-year gain.
• Nassau County: Home sales have slowed, with the average marketing period now extending to 65 days.
• Queens: Modest growth in pending sales (+2%) indicates demand persists, even as buyer affordability remains a concern.
• Suffolk County: Relatively stable prices near $530,000, pointing to a balanced market in suburban areas.

As expected, the elevated mortgage rates are taming overall market activity, but pockets of stability and resilience remain across Long Island’s housing market.

Federal Reserve and Market Expectations

The Federal Reserve’s upcoming December meeting looms large over the mortgage market. The market consensus for the meeting includes:

• December 18 Decision: Markets currently predict a 50-55% probability of rates holding steady at the 4.50-4.75% range, while a smaller contingent expects either a cut or upward adjustment.
• January 2025 Projections: A mixed outlook, with 53% market sentiment supporting a continuation of current rates and other analysts betting on adjustments down to the 4.25-4.50% range.

Key Takeaways About Fed Behavior:

• Rates have remained unchanged since May 2023, marking one of the steepest periods of rate increases since the 1980s.
• Market participants are learning to navigate this new “higher-for-longer” environment, with far fewer expectations of drastic rate cuts in the near term.

While this stability might feel discouraging to buyers awaiting relief, modest improvements in affordability over time are more likely than any sudden market-wide changes.

Conclusion and Key Takeaways

The mortgage market for November 25, 2024, reflects a combination of seasonal calm and cautious optimism as rates stabilize following a turbulent year. Key points for industry professionals and buyers include:

• Mortgage Rates: Current rates hover around 7%, though a surprising 30-point dip offers a temporary breather.
• Economic Indicators: Stay tuned to upcoming home sales, GDP data, and jobless claims for insights that might influence future trends.
• Seasonal Opportunity: Take advantage of holiday stability before volatility potentially resumes in December.

Recommendations for Buyers:

• Consider locking in rates now if you’re financially ready, as further drops are far from guaranteed.
• Explore FHA and VA loan options for more affordable terms.

Advice for Mortgage Professionals:

• Leverage the current plateau in rates to reach clients who’ve been hesitant to act in previous weeks.
• Focus on educating potential buyers about realistic expectations for rate trajectories as we enter 2024.

The coming weeks will tell us much about which direction the market is headed, but for now, a period of relative calm presents a unique window of opportunity for those ready to act.