Beyond the Horizon: Exploring the Possibility of Declining Mortgage Rates

When you read about the housing market, you’ll probably come across some information about inflation or recent decisions made by the Federal Reserve (the Fed). But how do those two things impact you and your homebuying plans? Here's what you need to know.

The Federal Funds Rate Hikes Have Stalled

One of the Fed’s primary goals is to lower inflation. In order to do that, they started raising the Federal Funds Rate to slow down the economy. Even though this doesn’t directly dictate what happens with mortgage rates, it does have an impact.

Recently inflation has started to cool, a signal those increases worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July (see graph below):

And not only has the Fed decided not to raise the Federal Funds Rate the last three times the committee met, they’ve signaled there may actually be rate cuts coming in 2024. According to the New York Times (NYT):

“Federal Reserve officials left interest rates unchanged in their final policy decision of 2023 and forecast that they will cut borrowing costs three times in the coming year, a sign that the central bank is shifting toward the next phase in its fight against rapid inflation.”

This indicates the Fed thinks the economy and inflation are improving. Why does that matter to you and your plans to buy a home? It could end up leading to lower mortgage rates and improved affordability.

Mortgage Rates Are Coming Down

Mortgage rates are influenced by a wide variety of factors, and inflation and the Fed’s actions (or as has been the case recently, inaction) play a big role. Now that the Fed has paused the increases, it looks more likely mortgage rates will continue their downward trend (see graph below):

Although mortgage rates may remain volatile, their recent trend combined with expert forecasts indicate they could continue to go down in 2024. That would improve affordability for buyers and make it easier for sellers to move since they won’t feel as locked-in to their current, low mortgage rate.

Bottom Line

The Fed’s decisions have an indirect impact on mortgage rates. By not raising the Federal Funds Rate, mortgage rates are likely to continue declining. Let’s connect so you have expert advice about changes in the housing market and how they affect you.

117 Properties
Page 1 of 10
$939,000
Neighborhood: Willowbend Ph 3
3
Beds
2F11/2
Baths
2,504
Sq.Ft.
2004
Year Built
3
Days on Site
N6133515
MLS
$759,000
Neighborhood: Park Trace Estates
3
Beds
2F11/2
Baths
2,153
Sq.Ft.
2002
Year Built
4
Days on Site
A4614408
MLS
$375,000
Neighborhood: Bay Street Village
2
Beds
2
Baths
1,135
Sq.Ft.
2017
Year Built
5
Days on Site
A4593102
MLS
$629,000
Neighborhood: Sorrento Villas 2
2
Beds
2
Baths
1,389
Sq.Ft.
1969
Year Built
6
Days on Site
N6133372
MLS
$225,000
Neighborhood: Arbors
2
Beds
2
Baths
1,376
Sq.Ft.
1978
Year Built
6
Days on Site
A4614751
MLS
$650,000
Neighborhood: Bay Oaks Estates
4
Beds
3
Baths
2,229
Sq.Ft.
1996
Year Built
9
Days on Site
N6133406
MLS
$1,895,000
Neighborhood: Oaks 2 Ph 1
4
Beds
3F11/2
Baths
3,464
Sq.Ft.
2014
Year Built
12
Days on Site
A4613147
MLS
$315,000
Neighborhood: Pine Run Ii
2
Beds
2
Baths
1,325
Sq.Ft.
1979
Year Built
13
Days on Site
A4613353
MLS
$600,000
Neighborhood: Bay Oaks Estates
4
Beds
2
Baths
1,867
Sq.Ft.
1996
Year Built
13
Days on Site
A4611341
MLS
$950,000
Neighborhood: Southbay Yacht & Racquet Club
3
Beds
3
Baths
2,513
Sq.Ft.
1987
Year Built
14
Days on Site
A4612015
MLS
$289,900
Neighborhood: Arbors
2
Beds
2
Baths
1,199
Sq.Ft.
1980
Year Built
22
Days on Site
A4611491
MLS
$1,050,000
Neighborhood: Meridian At The Oaks Preserve
3
Beds
3
Baths
2,594
Sq.Ft.
2004
Year Built
23
Days on Site
A4611618
MLS

Post a Comment