Mortgage rates near 3-month low

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Mortgage rates drop near 3-month lows

The national average for a 30-year, fixed-rate mortgage fell 0.17% to 7.13%* on Wednesday.

There wasn’t any major economic news or reports on Wednesday. Movement in the bond market was said to be ‘moderate’ by most market watchers. There really weren’t any motivating factors in the market that should have sent rates substantially lower. We are getting inflation data today and that may have an impact on the market depending on how hot or cool the metrics come in.

We’re not quite at 3-month lows yet, but there’s a chance we may get there if the continued trend holds.

What will have to happen for the Fed to cut rates?

According to a recent article from CNBC, a few scenarios need to play out for the Federal Reserve to choose to cut rates in 2024. First, we would need to see a slowing economy and rising unemployment. Second, we would need to see inflation drop as the economy slows.

The article states that the Fed won’t cut rates just to cut them. They need a compelling reason such as the economy cooling off or inflation cooling off. It’s unlikely that one scenario happens without the other, but there are still situations in which a ‘soft landing’ could occur.

Chris Marangi, co-chief investment officer for value at Gabelli Funds, stated, “The Fed doesn’t want to take its foot off the brake too early. I don’t see them cutting just to reach some theoretical neutral rate. We expect some economic softness next year, so that won’t be a surprise. But a significant cut in rates needs to be preceded by significant economic weakness, and that’s not discounted in stock prices today.”

Mortgage demand sees a boost

A recent report from the Mortgage Bankers Association showed that mortgage demand is up 5% comparing this past week to the previous week.

Joel Kan, an MBA economist, stated, “Rates have declined more than 50 basis points over the past six weeks, which has helped to spur a small increase in purchase applications. The purchase market remains depressed because of the ongoing, low supply of existing homes on the market.”

Applications for mortgage refinancing was also up 1% on the same week-over-week chart.

* National average rates accurate as of 11/29/23 from and are not advertised rates from Guaranteed Rate.

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