Will Mortgage Rates Drop After the Next Fed Meeting?

Current Mortgage Rates

Let’s chat about something that’s on a lot of people’s minds lately: Will Mortgage Rates Drop After the next Fed Meeting?Remember back in 2021, when snagging a 30-year fixed-rate mortgage at nearly 3% was almost routine? Fast forward to today, and we’re staring at rates of 7.14% for 15 years and 7.87% for 30 years. It’s quite the leap, right?

Why the Federal Reserve’s Next Steps Matter to Us

Let’s focus on the key issue – the Federal Reserve. They’re the ones pulling the strings behind the scenes, influencing our mortgage rates through their federal funds rate decisions. With their meeting coming up on December 12-13, I can’t help but wonder about the ripple effect on our mortgage rates as we move into 2024.

Unpacking the Federal Reserve’s Role

The Fed’s choices – to hike, hold, or cut rates – are deeply intertwined with inflation and unemployment rates. With inflation being the main headache recently, the Fed’s been upping rates to try and curb our spending.

Jerome Powell, the Fed Chair, has been vocal about their mission to rein in inflation to their 2% target. But with inflation still hovering around 3.7% in September, we’re not quite out of the woods yet.

The ‘What-Ifs’ of the Fed’s Interest Rate Decisions

This is where things get spicy. The Fed’s been on a rate-hiking hiatus for a bit now, sparking debates about whether this is the calm before another increase. Powell’s stance is clear: if the economy says ‘jump’, they’ll jump.

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So, if the Fed opts for a rate hike in December, our mortgage rates might just jump up too.

Considering a Rate Cut – Wishful Thinking?

A rate cut would be a welcome relief for many of us, but let’s be real, it’s looking a bit doubtful. The Fed’s aiming for a 2% inflation rate, and we’re not quite there yet. However, with a couple more inflation reports due before their next meeting, I’m keeping my fingers crossed for a pleasant surprise.

Doug Duncan from Fannie Mae thinks we might see some rate reductions later next year, but only if inflation gets a tight leash.

If the Fed Plays it Cool

There’s always a chance the Fed might just decide to hold steady on rates. Inflation’s still a concern, but it’s not running rampant like last year. So, if the Fed decides to keep things as is, we might see our mortgage rates chilling at their current levels for a while.

As we all eagerly wait for the December Fed meeting results, it’s clear that a lot is hanging in the balance. The Fed’s decisions are closely linked to how inflation and unemployment are behaving. So, for anyone looking to buy a home or just keeping an eye on the market, getting a handle on these economic undercurrents is crucial.

The mortgage and federal policy world is a complex beast, always on the move. Staying on top of it and flexible is key. And you bet, I’ll be right here, breaking it down and sharing my takeaways to help you navigate these financial waters.