Look at 2023 in rates
Happy Holiday Week, where we spend some time each day trying to remember if it is Tuesday or Thursday, and then miss putting out the trash cans for pick up.
As we end the year here is a quick look back at the year in rates.
The biggest influencer on mortgage rates the past two years has been inflation. In January 2023 the rate of inflation was 6.4%, by November it had dropped substantially to 3.1%.
As it does from time to time, the Federal Reserve has dominated all conversations about markets. With the surge in inflation starting in 2021, the Fed waited to raise it’s benchmark Federal Funds rate until 2022 to try to control the increase in prices, and eventually drop the inflation rate to near 2.0%.
In January the Fed Funds rate was 4.33%. The Fed continued its policy of quantitative tightening and increased its in increments to 5.33% in August where it has remained.
The impact on mortgage rates from the first week of 2023 to this Friday, the last of 2023, was an increase in the 30-year fixed rate from 6.00% to 6.50%.
From a snapshot perspective the 6.50% rate is a big bump from the 6.00% to start the year, however for those in the industry it feels like a great rate as it is considerably lower then the peak rate of 7.875% for the week ending October 20, 2023.
As we enter 2024 the expectation is for rates to continue to decline as the Fed is signaling it will cut its benchmark rate in the coming year, perhaps as many as three times.
Expectations are not always met, if inflation continues to be stubborn and not drop, if employment markets tighten, if economic expansion surges, the Fed may not lower rates, or may find it necessary to hike rates again.
My feeling is that mortgage rates will find 6.00% again in 2024, and spend the latter half of the year as low as 5.75% and move between that mark and 6.00% or slightly higher.
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Rates for Friday December 29, 2023: We end the year
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.50% Flat
30-year high-balance conforming 7.00% Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
Hoping everyone had a great Christmas and that you are able to enjoy some quiet time this week—if that is what you desire. We have enjoyed having both daughters home for the week, the oldest heads back to Boston and work tomorrow.
Wishing everyone a happy and prosperous 2024, if I can assist with either in the new year let me know!
Have a great week,
Dennis
Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog
