THE ADVANTAGE
Your monthly recap of the most important
mortgage-related news, perspective, and advice
September 2023
4 minute read
The 2023 mortgage market has seen a lot of changes so far. The year has felt unpredictable to both borrowers and lenders alike. We want to help credit unions prepare for the future by providing you with a general update on where the market currently sits and what experts (and historical trends) predict for the final quarter, and start of next year.
What the Experts Say
The interest rate for a 30-year fixed-rate mortgage at the start of September 2022 was 5.66%. Today, September 2023 began with that rate at 7.18%. While the Fed has increased the rate many times since then, in general, experts believe the Federal Reserve rate hikes are slowing. While no one can know with absolute certainty what the future holds, here are some of the projections they’re making.
“The 30-year and 15-year fixed, I believe, will average around 7% and 6.375% during the first quarter of 2024.” Ralph DiBurnara, founder of Home Qualified
“Our base case assumes mortgage rates will be tighter by 25 to 50 basis points by the end of the first quarter 2024. This would put the 30-year fixed rate mortgage around 7%.” Jack Macdowell, co-founder and CIO at Palisades Group
“I think 30-year rates will be in the ballpark of 5.25% and 15-year rates to be around 4.875% a year from now.“ Mike Hardy, managing partner at Churchill Mortgage
“Expect elevated mortgage rates to finish the year [2024] between 6.5% to 6.8%.” Selma Hepp, chief economist at CoreLogic
Inflation Trends, the 2024 Election, and U.S. Treasury Bonds
There are many factors that influence mortgage interest rates. While expert opinions are usually mixed, inflation is perhaps one of the strongest predictors.
During the Fed’s annual retreat on August 25, Federal Reserve Chair, Jerome Powell, remarked “Although inflation has moved down from its peak — a welcome development — it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
CNBC indicated the economy may be slowing with “second-quarter gross domestic product revised downward to a 2.1% annual growth rate”. While the economy doesn’t directly impact rates, there is a correlation: as the economy slows, mortgage rates tend to fall.
Furthermore, election years typically usher in a wave of uncertainty across all markets. Growth across the Dow Jones Industrial Average slows to 6% (down from its typical 10.4% growth the year preceding an election). This slowing of the economy can ease the Fed’s appetite to raise rates further.
It also drives investors to move funds out of the stock market, which offers no guarantee of a return, over to bonds. As the demand for bonds increases, yields decrease. So keeping an eye on 10-year U.S. Treasury bond yields can also provide insight into the direction mortgage interest rates are heading.
Build Your Plane Before You Fly
Remember that neither good nor hard times last forever. They come in cycles and eventually change.
Your members are experiencing the same uncertainty that you’re feeling now. You can show members you’re thinking about their future plans by starting your partnership with MAM now—before members are ready to buy a home.
Adding mortgages to your product offerings now will mean your credit union is ready when the tides turn and members start buying again. It also gives us some extra time to help you spread the word about your new offering—with our compliance-reviewed marketing collateral. You can educate members about how to start saving for a down payment, which is one of the largest hurdles to home ownership, and the topic of next month’s edition.
Contact us to learn more about how MAM can lower your risk, keep you compliant, and provide a cost-effective and profitable pathway to offering mortgages to your members.
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Who Is MAM?
Member Advantage Mortgage (MAM) is a Credit Union Service Organization (CUSO) that helps credit unions increase revenue by offering mortgage solutions to their members.
We achieve this by finding the mortgage solution that is in each individual member’s best financial interest.
What We Do
Since 2006, MAM has offered first and second mortgage origination and fulfillment services to credit unions. We also provide marketing tools (like our Mortgage Payment Calculator) to increase lead generation.
How We Can Help You
We’ll help you improve member satisfaction and deepen member relationships by offering or streamlining your mortgage delivery process. You’ll be able to serve current members so they don’t need to turn to the competition, all while increasing your mortgage revenue and generating non-interest income.
How You Can Learn More
This page goes into greater detail on exactly how we provide support and partner with credit unions.
You can also call Jim Mitchell, our Senior Vice President of Strategic Partnerships, to get answers to any questions about partnering with MAM.
Disclaimer:
This information is solely for credit union and mortgage professionals and should not be distributed or provided to consumers or the general public.
This is not an offer for extension of credit nor a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. Certain restrictions may apply. All approvals subject to underwriting guidelines. Not all applicants will qualify. Member Advantage Mortgage, LLC is an Equal Housing Lender. We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.
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