Market Update & A Look Ahead ??

Hope you're having a great week and a wonderful holiday season! I wanted to share some insights on the mortgage market and what might be in store for us in the coming months.

Interest Rates

Good news! Mortgage rates have been declining for the past few weeks. According to Freddie Mac’s latest survey of average mortgage rates, the 30-year fixed-rate mortgage is now averaging 6.60%, down from 6.95% a year ago. This is partly due to the Federal Reserve's recent rate cuts aimed at stimulating the economy.

Inflation

However, inflation is still a bit stubborn, which might slow down further rate cuts. The good news is that we're seeing signs of easing inflation, like slowing rent increases. Keep an eye out for the Fed's meeting next week, where they'll discuss their economic projections and preferred inflation gauge, the PCE Index.

Housing Market

Despite the challenges, there are some positive trends! Small businesses are feeling optimistic, which could boost job growth and housing activity.

Experts predict that while mortgage rates may stay above 6% in 2025, we could see a slight decline by year-end. New home sales are expected to remain strong, and there are signs that home price growth will continue to decelerate.

As for this week

The final Fed Meeting of 2024 adjourned on Wednesday, and as expected, the Fed did decide on a 25 basis point rate cut. Many experts view the Fed’s policy as overly restrictive, given a slowing employment market. However, what we didn’t expect was the abrupt uptick in rates we’ve seen throughout the afternoon?since the Fed’s announcement.

What happened? It wasn’t the Fed’s decision on interest rates because that was largely expected as it happened. What surprised traders and caused the uptick was the Fed’s prediction that the Fed members see their interest rates being higher in 2025 than they had last predicted 3 months ago. This unexpected revelation led to abrupt and volatile action in bond markets and, thus, with mortgage rates.

What This Means for You

Whether you're a homeowner, a prospective buyer, or a valued referral partner, staying informed about the market can help you make the best decisions.

As always, I'm here to answer any questions you may have. Feel free to send me an email or give me a call. Let's chat about your specific situation and goals!

Wishing you Happy Holidays!