Mortgage Rates Drop for Second Consecutive Week Amid Economic Cooling Signs

Federal Reserve's decision in December could further impact mortgage rates; potential for modest interest rate cuts in 2024 if inflation is tamed.

Mortgage rates have dropped for the second consecutive week, with the average rate falling to 7.5% from 7.76% the previous week. This is the largest one-week decrease since last November.
The Federal Reserve's decision in December could further impact mortgage rates. If the Fed raises interest rates, it is possible that the mortgage rate will go up alongside the federal funds rate.
Despite the recent drop in rates, the cost of monthly homeownership has increased due to a 30% rise in home prices since 2020. The median U.S. home price has risen to $431,000.
The Fed's decision to raise, hold, or cut rates is based on inflation and unemployment. High inflation rates over the past 18 months have led the Fed to raise rates in an attempt to decrease consumer spending.
Modest interest rate cuts are expected in the second half of 2024 if inflation is tamed. However, consumers should not expect a return to the low rates of the 2010s anytime soon.