MORTGAGE RATES, BOND MARKET, FED DOT PLOT, and MORE!
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Rates are?FLAT?as we end the week!? Check em' out and then read our 30 second commentary below.?Rates are averages / examples for network use only: Pricing as of 12/27/2024 at 9:17 AM.
MORTGAGE RATES, BOND MARKET, FED DOT PLOT, and MORE!
Mortgage Rates Hold Steady Amid Holiday Slumber This week, mortgage rates have remained relatively flat compared to last Friday. The holiday season has brought the usual slowdown in bond market activity, which serves as the foundation for mortgage rate movements. While this lull is typical during Christmas week, it also brings the potential for increased volatility. As a result, rates may fluctuate unpredictably, sometimes even shifting in both directions within the same day.
A Volatile Thursday Thursday was a prime example of this volatility. Bonds began the day at their weakest levels in months, leading to mortgage rates starting near their recent highs. However, as the day progressed, bonds steadily improved, bringing rates back down. By Friday morning, mortgage rates had returned to levels nearly identical to where they were last week.
Fed Rate Cuts and Their Limited Impact on Mortgage Rates Last week, the Federal Reserve reduced its benchmark funds rate by another 0.25%, marking a full percentage-point cut for the year. Despite the Fed’s actions, mortgage rates have generally risen throughout the fourth quarter.
This disconnect arises because mortgage rates are more closely tied to Treasury yields than the federal funds rate. November saw rates climb as the bond market reacted to external factors, including political developments like Donald Trump’s election win. Additionally, the Fed’s indication of fewer rate cuts in 2025 has contributed to market volatility.
2025 Rate Outlook The Fed’s latest “dot plot”—which reflects individual members’ rate expectations—projects the benchmark rate to fall to a range of 3.75% to 4% by the end of 2025. Currently, the rate stands at 4.25% to 4.50%. Earlier projections had indicated a full percentage-point reduction in 2025, but persistent inflation and potential overcorrections by the Fed have tempered expectations.
What Does This Mean for Homebuyers? Looking ahead, experts forecast marginal rate drops in 2025. Now may be an opportune time to negotiate on home prices as sellers remain flexible. Stay informed and make strategic decisions in today’s dynamic market!
Summary The market has been erratic.? Even the most respected analysts have gotten it wrong these last 24 months. As we end the year rates have risen throughout Q4, but it's helped buyers get into homes with less competition.? The timing is still now for those looking to enter the housing market.? ?
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