We have certainly come a long way since Halloween, when 30-year fixed rates were pushing the 8% mark. Rates have rallied quite a bit, almost 1.5% lower, but we most likely will need to see them move even lower before we get a notable uptick in real estate sales. I still believe we need to see 30-year fixed rates moved below 6% and probably even closer to 5.75% before we see a sustainable pickup. Unfortunately, we may be waiting until March before we see mortgage rates reach those levels.
We have seen mortgage rates move almost 1.5% in just two months in anticipation that the FED is done hiking, and that “cuts” are on the horizon. The “Market” has baked these moves in already, hence why we have seen mortgage rates decline sharply in such a short period of time. I truly believe that we need to see more compelling data over the next 30 days that will confirm that the FED will be ready to start making rate cuts by March. Any signs that the economy is doing better than expected and/or inflation is not moving down as quickly as the FED would like will move rates notably higher. Not back to 8%, but possibly back into the high 6% range. Remember, we still have some FED folks who are not 100% sure they are done making hikes. Strange…but true. We need to see higher unemployment numbers and continued declines in the December inflation numbers, which will be released in January. We will also get a December retail sales report, which will tell us a lot about our current economy. I hate to be a “Debbie Downer,” but a slower economy with more folks unemployed and prices falling will equal lower mortgage rates.
Hold on tight, folks… we might be in for a wild roller coaster ride over the next 30-90 days.
Hope all of you have a wonderful and safe New Years and thank you so much for your support this year.
Remember… The BEST RATE… IS A LOCKED RATE… with a float down… ask me about our program that allows you to lock your rate and then float down if rates move lower.
Make sure you (or your buyer) get pre-approved before looking at homes so we can determine if you are looking in the correct price range and have you armed to submit an offer with a pre-approval letter!
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Blog post date: Thursday, December 28, 2023