In 2024, the Feds will begin slowly cutting rates mid year! The rate for a 30-year fixed mortgage was around 7.31% for conventional financing and 6.5% for FHA.

While mortgage rates are lower than they were a year ago, did you know that the rates are not directly affected by the Fed??

 

Ok, let’s break it down…

The Federal Reserve doesn’t set mortgage rates, but there is some correlation. What’s really behind mortgage rates being pushed up is inflation!

To slow inflation, the Federal Reserve is increasing interest rates. When the fed rate goes up, it tends to make borrowing money more expensive for us!

But there have been times where, after the Fed’s made a rate increase, the mortgage interest rates have actually gone down!!

So, what does this mean for you?

If you’re looking to buy a home, it should be based on your financial situation and not every time the fed rate changes!

Here are a couple of things to keep in mind:

  • The lower mortgage rates get, the hotter the housing market will get (i.e. competition increases).

That’s why, if you find a deal, this is a great time to jump on it!! We won’t be in this environment forever, so when you see the right opportunity, be ready to act on it.

  • If you find a home that you want and can afford the monthly mortgage payment, don’t wait to buy.

What’s also important is that you lock in a rate you can afford.

Although the rates are higher than 2021, not all mortgage rates are the same.

Be sure to do your research so that you’re getting a rate you can comfortably manage.