Realtor In South Florida


When you read about the housing market, you’ll probably come across some
information about inflation or recent decisions made by the Federal Reserve
(the Fed). But how do those two things impact you and your homebuying
plans? Here’s what you need to know.

The Federal Funds Rate Hikes Have Stalled

One of the Fed’s primary objectives is to lower inflation. In order to do that, they started raising the Federal Funds Rate to decrease the economy. Although this doesn’t directly determine what happens with home mortgage rates, it does have an effect.

Just recently inflation has begun to cool, a signal those boosts worked and are bringing inflation back down. As a result, the Fed’s hikes have actually gotten smaller and less frequent. In truth, there haven’t been any boosts considering that July (see graph below):

And not only has the Fed decided not to raise the Federal Funds Rate the last three times the committee met, they’ve signaled there may actually be rate cuts being available in 2024. According to the New York Times (NYT):

“Federal Reserve authorities left rates of interest the same in their last policy choice of 2023 and anticipated that they will cut borrowing costs 3 times in the coming year, an indication that the central bank is moving toward the next phase in its battle against quick inflation.”

This shows the Fed thinks the economy and inflation are enhancing. Why does that matter to you and your strategies to purchase a home? It might end up causing lower home mortgage rates and improved cost.

Home Loan Rates Are Coming Down

Mortgage rates are affected by a wide range of factors, and inflation and the Fed’s actions (or as has been the case recently, inaction) play a huge role. Now that the Fed has paused the increases, it looks more likely home loan rates will continue their down pattern (see graph listed below):


mortgage rates might remain unstable, their recent pattern combined with expert projections show they might continue to go down in 2024. That would improve price for buyers and make it much easier for sellers to move since they will not feel as locked-in to their current, low mortgage rate.

Bottom Line

The Fed’s decisions have an indirect influence on mortgage rates. By not raising the Federal Funds Rate, home loan rates are likely to continue decreasing. Let’s connect so you have skilled guidance about modifications in the housing market and how they impact you.

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