Mortgage Rates Drop Below 6.7%—What’s Next for Buyers?

Since peaking at 7.13% on November 6, 30-year mortgage rates have been trending lower, briefly dipping below 6.7% by December 6. 

Mortgage Rates Move Lower—A Positive Sign for Buyers

Despite economic data that wasn’t exactly bond-market friendly—like 227,000 new jobs added in November (BLS) and a slight uptick in inflation to 2.7% YoY (CPI)—mortgage rates have fallen.

For context, rates hit a near-term high of 7.13% on November 6, just after the U.S. Presidential Election. The recent dip below 6.7% provides a welcome reprieve for buyers who’ve been squeezed by affordability concerns.

The Fed and Future Rate Cuts: What to Expect

The Federal Reserve’s actions will play a critical role in determining where mortgage rates go from here. Here’s where the Fed Funds futures market currently stands:

• December 18 FOMC Meeting:
• 98% probability of a 25 bps rate cut (from 4.50–4.75% to 4.25–4.50%).
• Only a 2% probability the Fed will hold steady.
• January 29 FOMC Meeting:
• 75% probability the Fed will hold steady.
• 20% probability of an additional 25 bps cut (which would drop the range to 4.00–4.25%).

What This Means for Buyers and Sellers

Lower mortgage rates could bring more buyers back into the market. Affordability improves as rates decline, helping buyers stretch their budgets and potentially increasing competition for homes. For sellers, falling rates may unlock demand from buyers who’ve been waiting on the sidelines.

Key Takeaways:

• • Mortgage rates have dipped below 6.7%, down from 7.13% in early November.

  • The Fed is widely expected to cut rates further on December 18, with additional cuts possible in early 2024.

  • Lower rates could lead to increased market activity as buyers regain purchasing power.

What’s Next?
If you’re considering buying or selling, now is the time to watch rates closely. A shift downward could create more favorable conditions in early 2024, making this a window of opportunity to act before competition heats up.