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  • Mortgage Rate News: Taking a look at Fed plans for Q4 2023 and Q1 2024

    Saturday, September 23, 2023   /   by Amy Brown

    Mortgage Rate News: Taking a look at Fed plans for Q4 2023 and Q1 2024

    While a rate hike was put on hold for this month’s meeting, there is another rate hike planned for November 2023. However, this is planned to be the last rate hike for quite some time, if not for the foreseeable future, as hopes are that this last one will finally stabilize inflation. What does that mean for homebuyers? That means that rates are going to stay at their current level for the Fall with one small hike going into winter and then that rate is going to hold going into 2024 until inflation hits the target goal of 2%. 

    Since more inventory is coming on the market every day and home prices continue to rise, real estate experts advise to go ahead and buy, reap the benefits of equity gains, and then refinance in the latter part of 2024 when rates are expected to start declining. Here are the prospectives from some of our lending experts:

    Movement Mortgage

    A more hawkish Fed. That was the tone of the FOMC meeting on Wednesday. As expected, the FOMC opted to keep rates unchanged for this month. However, what caught many by surprise was the Fed's future guidance. Twelve out of the nineteen members projected another rate hike in 2023, while the committee reduced its rate cut projection for 2024. These projections caught markets somewhat off guard resulting in 2-year yields going through 5.15% and 10-year yields up through 4.42, about a 10bps jump on both. The prevailing market narrative suggests that the Fed has finished hiking rates, but that rates will remain “higher for longer.”

    Market participants point to the lowering inflation trend and the labor market realignment as key factors in another Fed pause at the November meeting. Additionally, Thursday morning economic data saw another soft print on jobless claims, which sent yields higher yet again. The tug-of-war between the markets and the Fed, coupled with increasing discussions about a potential government shutdown in early October, suggests that volatility is likely to persist.

    Churchill Mortgage

    The Federal Reserve decided to hold interest rates steady, with an expectation of potentially one more rate hike before the end of the year. 

    • This indicates a more restrictive policy and a 'higher-for-longer' approach to interest rates to continue to stamp out inflation.
    • The federal funds rate remains between 5.25%-5.5%, the highest in nearly 22 years. (Note: This is not the same as interest rates!).
    • The inflation rate has dropped from 9.1% to 3.7% since June, getting much closer to the Fed's 2% target.

    Though the Fed wants to see more progress on inflation, Fed officials are optimistic about economic growth in 2024.  


    What this means for home buyers:

    Rate stability is better than a rate hike, and real estate still remains a strong and secure investment. Since mortgage rates can be unpredictable, many experts advise those in a solid financial position to: rent the rate and buy the home. So, it may be wiser to buy a home now to begin building equity and refinance when rates lower.

    My summation

    I agree with our lending partners in that homebuyers in a good financial position should go ahead and take advantage of less competition for homes in the current homebuyer marketplace. Right now you have a better chance of grabbing the home of your dreams without as much grappling, profiting from the equity gains, then getting that lower rate that you desire in the coming year. It’s a great buyer strategy in a tough real estate market.