The November 2024 FOMC Meet headed by Fed chair Jerome Powell is crucial given that it coincides with the election frenzy surrounding the US Presidential Polls 2024. In its previous meeting, the FOMC had cut rates by 50 basis points.
The Fed will announce its decision at 2 p.m. ET on Nov. 7, followed by a press conference with Fed Chair Jerome Powell at 2:30 p.m.
The next Fed rate decision will be announced on Dec. 18.
Understanding the Fed’s Role in the Market
The Federal Reserve doesn’t set mortgage rates, but their decisions do influence them. Every time they meet, they assess the state of the economy and decide whether to raise or lower the Federal Funds Rate—the rate at which banks lend to each other. Changes to this rate can ripple through the economy and impact mortgage rates indirectly. The Fed is expected to shave its benchmark rate by 0.25 percentage points on Thursday. So, if you’re looking to buy a home, it’s important to understand these connections.
But here’s the thing: while mortgage rates are influenced by the Fed’s actions, they are also driven by broader economic trends. So, what exactly should you be paying attention to:
Key Economic Factors to Watch
When the Fed makes decisions, they’re paying close attention to three big indicators
- Inflation: The Fed has been trying to manage inflation, which has been running higher than their target of 2%. Over the last couple of years, inflation has been gradually coming down, but it’s still above the desired level. This means they are cautious about making borrowing too easy, as they don’t want prices to shoot back up too quickly. However, as inflation continues to cool, there’s more room for mortgage rates to follow suit and drop.
- Job Growth: A strong job market can push inflation higher, which is something the Fed wants to avoid. Lately, the economy has been adding fewer new jobs, signaling a slowdown that might give the Fed the green light to lower rates further. The goal is to cool things down just enough without triggering a recession. This balancing act affects how quickly we might see mortgage rates decline.
- Unemployment Rate: A low unemployment rate is generally a good sign, but it can also keep inflation high if too many people are working and spending. Right now, the unemployment rate remains low, which shows the job market is still strong. The Fed wants to see some softening here, but not too much.
How Does This Impact Your Homebuying Decision?
So, what does this mean for you as a potential homebuyer? Should you wait for rates to drop more, or is now a good time to act?
Mortgage rates are likely to come down gradually over the next year, but they won’t fall overnight. In the meantime, real estate prices and competition in the housing market are still important factors to consider. Waiting for the “perfect” rate could mean missing out on the right home at the right price, especially if you’re in a competitive market.
The good news is that if you’re ready to buy, there are strategies to help you navigate today’s rates. You might explore options like rate buydowns or even refinancing down the road when rates improve. The most important thing is to focus on your own financial readiness, rather than trying to time the market perfectly.
Looking Ahead
No one can predict exactly when rates will hit their lowest point, but the overall trend suggests we’ll see some improvement over the next 12 months. The Fed is walking a tightrope between managing inflation and keeping the economy stable, and that will influence mortgage rates as we move into 2025.
The key takeaway? If you’re in a position to buy, don’t wait solely on rate speculation. Instead, focus on finding a home that meets your needs, and work with your mortgage broker to find the best financing solution available now. While economic conditions are ever-changing, one thing remains true: the decision to buy a home should be based on your personal goals and financial situation, not just what the market is doing. Whether rates drop tomorrow or next year, the homebuying process can be optimized with the right guidance and planning.
If you’re ready to explore your options or simply have questions about where the market is heading, let’s connect. We are here to help you make informed decisions that fit your unique circumstances. The market may have its ups and downs, but together, we can find the best path forward.