Analysts at the Investment banking company Jefferies, predict that upcoming Federal Reserve rate cuts could trigger a significant refinance rally, unlocking $2.7 trillion in refinancing opportunities. They foresee mortgage rates dropping below 7% by the end of 2024 and further into 2025. This expectation is based on recent economic data indicating a favorable path towards rate cuts, with inflation rates showing a consistent decline. The Consumer Price Index (CPI) rose by only 3% annually in June, marking the third consecutive month of cooling inflation.
Federal Reserve Chair Jerome Powell’s recent comments suggest that rate cuts could occur even before inflation reaches the Fed’s 2% target. Current market predictions show a high likelihood of rate cuts by September. If rates fall to the projected levels, many homeowners with mortgages originated at rates between 6.25% and 7.75% will find refinancing beneficial, leading to increased refinance volumes in late 2024 and early 2025.
Source : Lower rates could support a $2.7T refinance rally: Jefferies