The positive signals for the housing market in 2024 include improvements in rates, affordability, and available inventory, alongside a moderation of monthly home price growth on a seasonally adjusted basis.
The current market remains driven by interest rates. With the recent dip in rates, a noticeable uptick in purchase mortgage demand has reached levels comparable to those observed last summer. This trend is consistent with changes in 30-year mortgage rates and their impact on affordability.
The refinance market, while still predominantly focused on purchases, has shown signs of revival, with potential for further growth as interest rates continue to ease.
“While the mortgage market remains overwhelmingly purchase-centric, refinance incentive is rising, albeit slowly, alongside easing interest rates,” Walden said in the report. “Since interest rates peaked back in October, we’ve seen a threefold increase in the number of mortgage holders who could reduce their first lien rate by at least 75 bps with a rate/term refi. And while that population stands at roughly 1.7 million – up from 520K last fall – it is still a historically small number. Should rates fall to 6% by year’s end, as current forecasts suggest, the number of borrowers with refinance incentives would rise, particularly among 2023 vintage originations.
“Under that scenario – a potential needle mover for the refinance market – some 46% of 2023-vintage borrowers would be ‘in the money,’ with nearly a third able to cut a full percentage point off their current rates. As more legacy mortgages regain rate incentive as well, the overall ‘in the money’ population would more than double to 3.8 million by the end of the year, with nearly 60% of that growth coming from loans originated in 2023.”
Source: mpamag.com