The Federal Reserve raised interest rates again
As expected, the Federal Reserve increased interest rates one-quarter of a percentage point yesterday. In the press conference after the announcement, Federal Reserve chairman Jerome Powell stated that the economy’s disinflationary process has started. However, it’s far too early to declare victory over inflation. The Fed’s goal of returning to a 2% inflation rate is still their target.
Powell also stated that the Fed is mort focused on jobs data than anything else. When asked about future rate cuts, Powell indicated that he didn’t see that occurring until 2024.
How did the mortgage market react?
The national average for a 30-year, fixed rate mortgage was sideways for most of the early session, but ended the day lower. A 30-year, fixed rate mortgage ended Wednesday’s session down 0.13%, at 6.04%.
Could the national average tick below 6.00%? We’re awfully close, and the situation definitely bears monitoring.
Are homebuyers expecting mortgage rates to drop further?
Based on recent mortgage application data, it looks like they are. After a strong start to the New Year, mortgage applications fell 9% this past week when compared to the previous week.
Mortgage rates have continued to cool off since peaking over 7% in November, but it appears that homebuyers chose to take a wait and see attitude ahead of Wednesday’s FOMC meeting.
However, business is about to pick up according to Mortgage Bankers Association economist Joel Kan. When asked about the spring buying season, Kan stated, “Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth.” Kan also added, “Both trends will help some buyers regain purchasing power.”
Did you know you can lock a mortgage rate for up to 90 days? It’s true! And with mortgage rates well off peak, this is a great opportunity to lock your rate and start home shopping again.
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