Federal Reserve Expected to Hold Rates Steady : Mortgage Market Anticipates Guidance on Future Rate Moves

Federal Reserve Expected to Hold Rates Steady; Mortgage Market Anticipates Guidance on Future Rate Moves 

The Federal Reserve is anticipated to announce its decision to maintain the federal funds rate during its January meeting. However, what's drawing the most attention is the insight Fed officials will provide regarding potential future rate adjustments. 

Though mortgage rates have seen minimal movement recently, slight decreases today could be influenced by comments emerging from the current Fed meeting. Data from Zillow indicates a slight decline in 30-year mortgage rates this week compared to last week's average of 6.39%. 

The direction of mortgage rates following Fed Chair Jerome Powell's press conference hinges on his remarks regarding the Fed's progress in combating inflation and hints about potential rate cuts. 

While Fed officials have signaled openness to rate cuts in the coming year, there's no rush apparent in their approach. As the Fed gradually lowers the federal funds rate, it's expected that mortgage rates will decrease throughout 2024. However, the timing of these cuts will determine when homeowners can benefit from lower mortgage rates. 

Additionally, the limited housing supply suggests that home prices are unlikely to drop soon and may even rise as mortgage rates decline. Fixed-rate and adjustable-rate mortgages each have their advantages and disadvantages, with fixed-rate mortgages offering stability but at potentially higher rates, while adjustable-rate mortgages provide lower initial rates that can fluctuate over time.