Daisy Watts 
Dec 19, 2023
Introduction Mortgage rates, high throughout 2022 and 2023, may see a potential drop before 2024. The outcome depends on the economic data expected in this month, including labour reports, inflation figures, and the Federal Reserve's final policy meeting.
Fed influence on mortgage rates
The Federal Reserve's decisions on the federal funds rate significantly impact mortgage rates. The Fed adjusts rates based on economic conditions to achieve maximum employment and stable prices, influencing borrowing costs throughout the economy.
Economic data affects mortgage rates
The Fed relies on economic indicators like unemployment, GDP, CPI, and PCE to assess the economy. With inflation above the target and employment still recovering, upcoming December data, especially the jobs report, will be crucial in determining the direction of mortgage rates.
Expectation from mortgage rates in near future
While experts anticipate high mortgage rates for the rest of 2023, a slight decline is possible in 2024. The timing and magnitude of changes hinge on economic performance. If the economy continues to overheat, rates may rise further; if it cools down, rates might decrease.
Expert advice for homebuyers
Given market uncertainty, experts recommend:
- Shop around: Compare rates, fees, and APR from different lenders.
- Lock in your rate: Act quickly to secure a favourable rate before it changes.
- Consider shorter-term loans: Explore 15 or 10-year fixed mortgages for lower rates.
- Consider cash-out refinance: If you own a home, evaluate the benefits and drawbacks of a cash-out refinance.
- Consult a loan originator: Seek professional guidance to navigate the mortgage landscape, monitor rate changes, and plan strategically.
