Are clearer skies ahead?
Our head of mortgage, Dan Richards, spoke with Money.com real estate reporter Leslie Cook about what to expect following June’s Fed Meeting and where rates will go in the coming months.
Read on for Dan’s full analysis and prediction.
Dan Richards, President of Flyhomes Mortgage
The Federal Reserve left rates unchanged following their June meeting, but there were still plenty of interesting takeaways. Leading up to Chair Powell’s June 12th press conference there was speculation his statements would set the stage for fewer rate cuts than previously discussed, and that’s exactly what happened. The majority opinion leaving the press conference was that we’re now likely to see only one rate cut in 2024, down from the three cuts that the industry was planning around at the start of the year.
While Inflation has come down dramatically over the past 24 months, it still remains above the Fed’s 2% mandate. Inflation indices have also been slowing or holding steady as of late, further dampening consumer expectations, and leaving Powell and the other Fed presidents feeling justified sticking with their conservative monetary stance.
In the Q&A portion of Powell‘s press conference he touched on the labor market, and specifically how it has cooled significantly from its overheated state two years ago. Many believe job numbers are the best predictor of the Fed’s actions, myself included, so if employment continues to come into better balance additional rate cuts could be back on the table before end of year.
The immediate change in mortgage rates following Powell’s press conference was seen in the intraday movement of the 30 year fixed rate, which dropped below 7.0%. My prediction for the next few months is that rates will hold steady in the high 6% or low 7% range, with 6.5% representing the low end of the range and 7.3% the upper end. Keep an eye on the labor market though as that’s going to tell us a lot about whether the Fed is going to bring more rates cuts back into play.
– Dan Richards
