Mortgage Rates Dip This Week: What the Anticipated Fed Rate Cut Means for You

Mortgage rates dropped this week, fueled by optimism that the Federal Reserve might lower short-term interest rates when it meets in December. The average rate for a 30-year fixed mortgage fell by 15 basis points to 6.08% APR, according to Zillow.

Interestingly, this decline came during a week with scant economic data for investors to analyze. Many government reports remain delayed, leaving the mortgage market to grapple with speculation rather than hard facts. Investors have particularly latched onto comments from Federal Reserve officials, adding a sprinkle of hope to the mix.

The last Fed meeting in late October revealed some divisions among committee members. One member advocated for a half-point rate cut, while another wanted no changes at all. This disagreement indicates a tense mood as the committee approaches its next meeting on December 9-10. Most members are leaning towards a rate cut, but they aren’t all on the same page about timing. The release of these meeting minutes didn’t sit well with mortgage investors, who are eager for continued cuts.

Adding to the speculation, on November 21, John Williams, president of the Federal Reserve Bank of New York, hinted at a potential rate cut in December during a speech in Chile. This comment helped push mortgage rates further down.

While the timing of this rate drop isn’t ideal—given the holiday season isn’t the busiest time for home buying—it could prompt some homeowners to consider refinancing. Carolyn Morganbesser, assistant vice president at Affinity Federal Credit Union, noted that many borrowers are looking to refinance for better rates. Some are opting for cash-out refinances, using the extra cash for renovations. Many homeowners are staying put longer, investing in home improvements like kitchens and bathrooms.

In recent years, refinancing has seen a surge. According to a Freddie Mac report, 57% of mortgage applications in 2020 were for refinancing. This trend reflects broader economic conditions and consumer confidence, as many people look to take advantage of lower rates. As we approach year-end, it will be interesting to see how these dynamics evolve.

For more in-depth information about mortgage rates and refinancing options, check out [NerdWallet’s mortgage guide](https://www.nerdwallet.com/mortgages/learn/mortgages?utm_campaign=ct_prod&utm_content=1911939&utm_medium=rss&utm_source=syndication&utm_term=bloxdigital).

Source link

mortgage rates, mortgages