Fed Chair Jerome Powell recently announced that the central bank will begin cutting the fed funds rate, starting with a 0.50 percentage point (50 bps) reduction this month. Additionally, the Fed signaled that more cuts are likely during their final two meetings of the year.
So, what does this mean for mortgage rates?
While the Fed doesn't directly control long-term rates, including the 30-year fixed mortgage rate, their policy decisions do influence the market. We've already seen the average 30-year fixed rate drop from 7.79% in October 2023 to 6.20% last week.
Industry experts from the Mortgage Bankers Association, Wells Fargo, Fannie Mae, and Moody's all expect mortgage rates to drop a little more as the Fed's actions stabilize the market.
Moody's chief economist Mark Zandi forecasts the 30-year fixed rate will approach 6.0% by the end of this year and settle around 5.5% by the end of 2025.
Lower mortgage rates could mean more buyer demand. To understand how this could impact your future real estate plans, don't hesitate to call me immediately.
