Recent economic data supports a path toward rate cuts and, therefore, a refinance rally. We estimate a near-the-money' pipeline of approximately $2.7 trillion to be refinanced if rate cuts materialize. Soft inflation prints have made the environment more favorable for rate cuts.
Fed Chair Jerome Powell stated that policymakers would not wait for inflation to reach 2% before cutting benchmark rates. As a result, monetary policy watchers believe there is a 95.3% chance of rates staying unchanged in July and a 98.1% chance of a rate cut in September.
Jefferies analysts anticipate mortgage rates reaching 6.5% by the end of 2024. They suggest rates of 6.5% will increase refinance volume in the fourth quarter of 2024 and the first quarter of 2025.
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