Optimism in the Air!

Can you feel the optimism in the air over mortgage rates?

Recently, Federal Reserve Chair Jerome Powell noted that the progress the Federal Reserve has made on the inflation front means rate cuts are clearly a topic of discussion.

That announcement sent a wave of optimism through the air for homebuyers and sellers alike.

While long-term rates, such as mortgage rates, aren't directly set by the Fed, they do fluctuate based on financial market expectations of where short-term rates (which are set by the Fed) and the U.S. economy are headed. 

Sure enough, long-term rates—including mortgage rates—fell in the hours following the news of expected cuts in 2024.

Now, historically speaking, the U.S. economy typically enters a recession not long after the Fed concludes its rate hikes and initiates interest rate cuts.

Powell acknowledged these recession concerns, but he also pointed out that the U.S. economy has proven more resilient than expected so far, suggesting that this time might be the exception. 

So as we enter 2024, we’re eagerly awaiting the answers to two big questions: 

• Will the Federal Reserve successfully engineer a “soft landing” for the economy and avoid a recession?

and 

• Where will mortgage rates hover in 2024?

Stay tuned. We’ll keep you in the know.