fbpx
Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

At its eighth and final policy meeting of 2023, the Federal Reserve decided once again to skip raising the Fed funds rate, which is the amount banks pay to borrow money from each other overnight. This was the Fed’s fourth skip amid 11 rate hikes instituted since the first quarter of 2022 in an attempt to rein in inflation.

This decision did not come as a surprise, as recent data has shown that the economy is in fairly good shape. Inflation has continued to drift lower, and even though it is still above the central bank’s target of 2% annual growth, markets have already been pricing in the likelihood that the Fed is done raising interest rates this cycle and is now looking toward potential rate cuts in 2024.

If the central bank can continue to make progress toward its 2% target without bringing the economy to a more abrupt slowdown, there is the possibility of achieving a “soft landing.” That means the economy would grow enough to avoid a recession and a negative hit to the labor market, but not so strongly that it fuels inflation again.

What does the skip in Fed rate hikes mean to mortgage rates?

As we have pointed out in previous blogs about Fed rate increases, the Federal Reserve technically doesn’t determine mortgage rates. The rate of inflation has a much more direct impact on them, however. Skipping another increase in the Fed funds rate is a good sign that inflation is slowing, especially when supported by economic data.

That combination generally puts downward pressure on mortgage rates, and after hitting a 23-year high of 8% for a 30-year fixed-rate mortgage in October, rates have cooled down to the lowest levels since July. But remember, unlike the Fed rate, mortgage rates change daily and sometimes hourly. There is still the potential for plenty of volatility despite recent encouraging news about the slowing pace of inflation.

The best way to navigate interest rates on home loans is to speak with a Homeowners Licensed Mortgage Professional about current market conditions. In any market situation, we’re here to help you understand the rates that are available to you and get the best possible pricing on your next home loan.

How can we help?