-
Mortgage Rates Are Dropping
Mortgage rates are dropping the past three weeks. Many borrowers who have closed their home loans with rates in the 7% should maximize their credit scores to be ready to refinance in the coming months
https://www.youtube.com/live/eGIq0UNH4MQ?si=wr8gXeDb8hZrRc5T
-
8 Replies
-
Mortgage rates have been dropping over the past few weeks. The 10-year Treasuries are holding stable at 3.9% Let’s see what happens in the coming weeks and see if Mortgage Rates will plummet
-
By the way, the financial market, as it is on December 15, 2024, demonstrates clear tendencies in two areas that cannot be avoided by any potential buyer and investor, namely mortgage interest rates and the stock market.
Mortgage Interest Rates:
30-Year Fixed-Rate Mortgages: The drop persisted. As for now, APRA has lowered its target rate to 6.6%, making it the 3rd week of decline for rates.
15-Year Fixed-Rate Mortgages: The rate paid is below 5.84% on average.
Overall, mortgage rates remain high on average compared to the previously seen levels, thus presenting affordability issues for several buyers. In conjunction with high rates, the rising prices of homes have resulted in the exclusion of some prospective buyers, which has impacted the sales of homes. The housing market is heading towards the slowest year since 1995.
Stock Market Performance:
S&P 500: The market remains resilient, and if recent projections are accurate, the index could gain around 25% in 2025 owing to deregulation decisions and AI development.
Dow Jones Industrial Average (DJIA): The DJIA has suffered minor drops in the past, with a drop of 02 percent reported on December 13, 2024.
Nasdaq Composite: The tech-heavy index nudged up a bit, suggesting that technology stocks are performing in a rather mixed way.
Of particular note is the fact that a stronger Treasury bond yield pushes down equity valuations within interest rate-sensitive industries. Of course, the increase in the dollar’s strength has affected multinational firms by requiring the conversion of foreign profits back into dollars for the U.S. company.
Suggestions for Future Homebuyers/Investors:
Homebuyers: The recent mortgage rate drops may offer some hope, given the high rates and expensive homes that hinder affordability. Buyers might have to set practical expectations, shave down their budgets, or explore other options for financing.
Investors: The stock market is ripe with possibilities in various areas, especially those expected to grow with new technologies and policies. However, due to high market volatility and other external economic conditions, investments should be prudent and remain diversified.
Understanding these issues and engaging finance professionals is prudent for successfully maneuvering through a relatively complex economic environment.
-
Update: As of late 2024, most people looking for new real estate will have to reconsider their options, given how the cost of borrowing increased monthly, whether that be due to hikes in the price of interest and mortgages. As a response to inflation, the Federal Reserve raised its interest rates, meaning mortgage prices skyrocketed. They were hovering around the 7-8% mark, with home affordability blaming it on them. This made it challenging for potential buyers to enter the home market, contributing to the makeshift slope in home sales and the tangible cooling in the housing market. Regarding stock markets, various changes were experienced due to issues with interest rates and inflation stock fixing. Markets could have been better. Inflation reports and Fed announcements heavily influenced market trends. The stock market felt a wide range of sentiment as real estate and utility-related sectors suffered.
In contrast, certain technology stocks showed resilience against the storm. The neutral condition of higher home prices along the nonnegative slope of the mortgage rates is together resulting in an affordability crisis. Homebuyers are forced to wait. The remainder of 2024 seems difficult for buyers.
Alterations For The Market: Dollars and cents suggest something. This indicates that changes in real estate should be made regarding price-altering aspects. The analysts state that as rates get steadied, there will be shifts in the housing market with changes in experience.
These trends are vital to monitor as you plan to invest in the market, so consulting an advisor is essential.
-
What are the predictions for interest rate changes in the next six months?
-
To foresee shifts in the interest rate, it is necessary to consider several economic indicators and Federal Reserve policies. Here are some possible patterns for the upcoming six months:
Strategies of the Fed
The Fed’s commitment to curbing inflation will affect the rate of interest. If inflation remains high, the Fed will likely choose to increase the number of rate rises or maintain a high rate level.
On the other hand, if inflation begins to cool, the Fed may decide to wait for further rises or even reductions in the rate after the midpoint in 2024.
Indicators of Economic Activity
Employment, consumer spending, and inflation are the essential active economic indicators that will be closely monitored. Economically active conditions can lead to further rate normalization. In contrast, recessionary conditions may lead to a pause in the active conditions.
Rate Patterns Defromed Through Markets
In most instances, markets incorporate changes in the rates likely to happen and make the necessary adjustments. Observations of past and current data enable such anticipations from moving in the futures market.
Global Economic Environment
Developments in other countries, especially the more developed ones, will greatly influence the United States’ interest rates. Turbulent or stable global economies will affect how the Minneapolis Fed proceeds.
Future Forecasts
According to analysts, depending on inflation’s performance, slight increases or lower rates could be expected around the start of 2024.
Rate cuts can be forecasted if inflation declines by the middle of 2024. However, this will depend on the broader economy.
Overall, the outlook is rather murky so long as economic indicators and the Fed’s communications are closely monitored. This will help anticipate changes in interest rates for the next half year.
-
-
Can you elaborate on the current market expectations for rate changes?
-
This reply was modified 1 month ago by
Gustan Cho.
-
Of course! The current market interest rate forecasts consider the balance of economic indicators, actions of the Federal Reserve, and investors’ opinions. Let us examine this in more detail:
What is the current situation?
Mortgage Rates: As of December 2023, the average rate charged for home loans stands at 7 – 8% due to the Fed’s stringent response to the hike in mortgage rates.
Federal Funds Rate: The range for the Federal Funds Rate set by the American Federal Reserve is now rated at 5.25-5.50.
The Market’s View On The Economy
Investor Outlook: Investors are especially focused on inflation figures and economic statistics as they try to predict the Federal Reserve’s future actions. There is a widespread consensus that the Fed will err on caution in its future decisions.
-
This reply was modified 1 month ago by Gustan Cho.
-
This reply was modified 1 month ago by Gustan Cho. Reason: Spelling error
-
This reply was modified 1 month ago by Gustan Cho.
-
This reply was modified 1 month ago by Gustan Cho.
-
This reply was modified 1 month ago by
-
This reply was modified 1 month ago by
-
Let me add to that, if you don’t mind, Amelia.
Volatility: Sustained high rates could devastate growth and corporate earnings, which is why volatility has been prevalent in the markets.
Economic Factors
Inflation: Recent data suggests a steady decrease in inflation rates, which will affect how investors respond to future changes in rates by the Fed.
Employment Data: A surge in job creation can keep interest rates elevated. However, shifts in the labor market could create a case for a cut.
Futures Markets
Rate Futures: There is a mixture of predictions regarding the financial market, particularly ‘rate futures,’ as some traders believe that rate hikes will cease. At the same time, others expect a slight increase in rate hikes in early 2024.
Cut Reduction Forecast: A potential rate cut will be expected if inflation continues to fall by mid-2024.
Fed Communications
Forward guidance: The Fed summarizes its reports with economic forecasts and baseline projections. These comments help inform market participants about future policy adjustments, such as rate changes.
Global Influences
International Economic Conditions: The slowing down of economic activities in major markets may have a bearish impact on US rate expectations. This demonstrates that economic activity on a global basis can impact rate expectations in the US.
Overall, Commentary Summary
The main takeaway is that the Fed might be more dovish than the market sentiment expects. Therefore, if the 2024 Q1 rate is stable, it may be shifted downwards at the end of 2024, which will be beneficial in light of inflation trends. More fiscal measures or changes in monetary policy are likely to stabilize the economy. Still, they will not go further. Macro statistics and an eagle-eagle eye on the Fed comments will reveal how the rates will shift.
The CPI’s inflation data primarily inform the takeoff of interest rates. The following is an update regarding inflation-related issues:
State of Inflation Recently
CPI for November 2024: The CPI stands at 2.7, an increase compared with the 2.6 rate reported for the previous month on an annual comparison. The possibility of inflation still prevails, making it rather difficult for the Federal Reserve to make interest rate decisions.
Core CPI: The acceleration of the core CPI was 3.3 percent annually and 0.3 percent monthly. The metric is also compounded by becoming one of the most significant measures determining an economy’s inflation rate as it excludes volatile food and energy prices.
Prices of Fuel and Food: As reported, during November, fuel prices grew by 0.6 percent while food prices stabilized and stood at an increased index of 0.4 percent, further worsening the overall index of inflation.
Impact on Interest Rates
The ongoing inflation, especially in core sectors, signals that the Fed must lower rates carefully. Economists are