MBA and NAR expect spread to narrow with mortgage loan rates settling around 5.5% in 2024. 

The historic spread between the 10-year Treasury yield and 30-year mortgage rates should shrink by the end of the year, the Mortgage Bankers Association’s (MBA) deputy chief economist Joel Kan said recently at the National Association of Real Estate Editors annual convention. Traditionally, the 10-year Treasury rate is 180 basis points (bps) or so, but of late it has been more than 300 bps. Kan also told the National Association of Real Estate Editors during their annual conference that the MBA expects loan rates to average 5.6% by the end of the year, and that overall lending volume will hit $1.8 trillion. For 2024, the current MBA forecast is for rates in the 5.5% range and for originations to rise 25%, mostly in purchase mortgages. “There could be some cash-out refi activity,” the economist told the meeting, but mostly purchase. In another conference session, Jessica Lautz, deputy chief economist for the National Association of Realtors (NAR), predicted that existing home sales will dip 9.3% this year before making up that decline and then some next year by increasing 15.4%. Existing-home prices will leap 28% in 2024, after falling 1.8% this year, she ventured. The NAR expects loan rates to fall back to an average of 5.6% next year. In his presentation, Kan also said the market should see some improvement in credit availability “in the coming months. We’re at a point where everyone’s done tightening,” he said. “There’s still some risk aversion, but it’s starting to open up.”

Source: National Mortgage Professional