March Mortgage Rate Forecast
Expectations are that mortgage rates will eventually drop in 2024, but March isn't likely the month for it. It's more likely they'll hold steady because the economy hasn't cooled down enough yet to trigger a decline.
In a booming economy with plentiful jobs, prices tend to rise. And when these factors come together, they push interest rates upward. That's what occurred in February, and we're unlikely to see a reversal of those trends in March.
March follows a robust February.
Rates climbed in February, with the average rate on a 30-year mortgage hitting 6.78% in Freddie Mac's weekly survey, up from 6.64% in January.
This rise was spurred by a slew of strong economic data released in February, indicating that the economy was robust at the end of 2023 and into January. Overall, the economy grew at a 3.2% annual rate in the last three months of 2023. In January alone, 353,000 jobs were created, and the core consumer price index picked up speed. These signs of unexpectedly strong economic growth led to an increase in mortgage rates in February.
Mortgage rates aren't likely to decrease until there are clear signs, sustained over a few months, that the economy is slowing down. We're unlikely to see those signs in March, despite the Federal Reserve's efforts over the past two years.
All Eyes on the Federal Reserve
The Federal Reserve, America's central bank, has been working to control the economy and bring down inflation. However, inflation is still higher than the Fed wants. They want it to be around 2% each year. So, they plan to keep interest rates steady until they see clear signs that inflation is heading in the right direction. They're not in a hurry to lower interest rates anytime soon.
A Fed governor named Christopher J. Waller talked about this in a speech on Feb. 22. He's part of the group that decides on interest rates. He said it's important for the Fed to make sure inflation is getting better before they think about lowering rates.
Waller stated that the Fed won't lower rates at their March 20 meeting. So, it's unlikely that mortgage rates will go down in March. He did mention that he expects rates to go down later in the year.
Other Predictions on Mortgage Rates
Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors forecast a gradual decline in mortgage rates in 2024, reaching around 6% in the last three months of the year.
However, if the Fed keeps the federal funds rate unchanged through the first half of the year, expect possible upward adjustments to these forecasts.
In conclusion,
While expectations suggest that mortgage rates may eventually decrease in 2024, March is unlikely to see such a decline. Following a strong February, mortgage rates are expected to hold steady, reflecting the robust state of the economy. For those in the market to buy a house, Loan Factory can assist you in securing the best interest rate available amidst the current market conditions.
