Weekly Mortgage Rate Update- 12-5-23

Last week mortgage rates improved after Core PCE showed slowing inflation, as expected. Inflation has been trending the right direction in recent months.  As a result, rates have been steadily improving over the past 5 weeks.


The Fed seems to be done raising rates, at least that is what markets have decided.  Now the market focus is on when that first rate cut will be. Powell was clear on Friday that a cut is not on the table and he is not going to cut prematurely. He will either cut when we reach the inflation target or when something breaks in the economy, whichever comes first.   

If past Fed performance is a guide, they will wait longer than they should to act.  That slow reaction timing could weigh on our rate outlook during the 1st half of 2024 and cause some volatility. Remember, our better pricing is all based on market expectations of rate cuts early next year.

Here is the current market outlook of Fed Fund rate futures by the CME Fed Watch tool .  This shows over 50% of market expecting a cut by March 2024. I will refer back to this chart as the outlook changes.  For your reference, the current Fed fund rate is 5.25-5.50 on the chart and it shows 99.9% of markets believe the Fed will hold rates steady at the December meeting to be held next week.


This week we are treading water ahead of Friday to see how the November employment data looks.  This morning we received a taste of the data with the JOLTS report that showed job openings declining (and revised lower on previous readings).  Expected at 9.3 million openings, came in at 8.7 million.  Still strong, but we are seeing a trendline towards less job openings.  This is also evident in the job quits that showed less quits happening- closer to pre-pandemic levels.  This signals less opportunity to move up for higher pay in the job market.  Good for both the inflation outlook(slowing wage increases) and the employment outlook is not as white hot as previous. All positive news for mortgage rates.  Goodbye 7’s hello 6’s ????

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.

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