Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
- Mortgage rates move lower once again this week with the biggest improvement happening yesterday after the Fed Meeting.
- The improvement in rates were due to the Fed signaling that they plan to cut rates multiple times in 2024.
- This week’s Consumer Price Index and Producer Price Index also showed inflation moving lower.
This Week’s Fed Meeting
- The Federal Reserve had their last meeting of 2023 yesterday and maintained its benchmark Fed Funds Rate, opting to not raise or cut rates.
- The big improvement in mortgage rates occurred when the Fed signaled it will likely cut rates by 0.75% in the year ahead, which is an increase of 0.25% from their previous meeting in September.
- Remember, the Fed Funds Rate does not directly impact mortgage rates but this shift in outlook directly affects the bond market that mortgage rates are tied to.
CPI and PPI Inflation Reports
- This was a good week for inflation news as many reports and forecasts showed inflation moving lower.
- Tuesday’s release of the Consumer Price Index (CPI) report showed inflation moving lower year-over-year from 3.2% to 3.1%.
- Yesterday’s Producer Price Index (PPI) report showed producer inflation falling from 1.2% to 0.9% year-over-year.
- The Fed also announced yesterday that they also project inflation will fall to 2.4% in 2024, which is better than the 2.5% they projected in September.
- GOOD NEWS FOR MORTGAGE RATES – Mortgage rates moved to the lowest levels since May with the help of some good news coming from the Fed yesterday.
- FED MEETING RECAP – The Fed had their final meeting of the year and signaled rates cuts and a lower inflation prediction for 2024.
- LARGE INCREASE IN MORTGAGE ACTIVITY – The Mortgage Bankers Association said that mortgage application volume was up 7.4% last week as rates continue to move lower.
- CONSUMER PRICE INDEX – The CPI for November showed inflation falling further to 3.1% compared to the pandemic-era peak of 9.1% in June of 2022.