Mortgage rates dipped below the 7% mark for the first time since August after the Federal Reserve kept interest rates steady during their final meeting of 2023. The mortgage bond market reacted positively, and we saw a sharp drop in rates with the 30-year fixed rate nearing 6.99%. Here with this month’s mortgage update are our partners at New American Funding.
Key Takeaways & A Look Ahead
The latest pause marked the fourth one recorded in 2023, with rates held between a range of 5.25% and 5.5%. Also during the meeting, the Fed penciled in three rate cuts in 2024.
Inflation has eased without a significant increase in unemployment. However, continued progress in bringing inflation down is not assured and the path forward is uncertain. That said, Fed Chair Jerome Powell stated that they are fully committed to bringing inflation numbers down to their 2% goal throughout the upcoming year.
Additional rate hikes no longer appear to be part of the conversation. It is all about the pace of cuts from here. This is good news for the housing and mortgage markets, and we expect that this path for monetary policy should support further declines in mortgage rates in time for the spring housing market. It’s forecasted that we will see modest growth in new and existing home sales in 2024, supporting growth in purchase transactions, following an extraordinarily slow 2023.