Mortgage Rate Movement

Mortgage Rates have improved considerably from their peak of 8%, and their trajectory this year will be highly influenced by the path of inflation and the Federal Reserve’s actions.

After hiking rates at one of the fastest paces we have ever seen in history to help reduce very high inflation, the market is trying to anticipate when the Fed will begin cutting rates and slow the reduction of their balance sheet, as these actions should help lower Mortgage Rates.

One of the most important items the Fed is watching is their preferred measure of inflation, Core Personal Consumption Expenditures (PCE), which will need to move confidently towards their 2% target. The most recent inflation reading shows that Core inflation is at 2.9%, which is still above the Fed’s target. But the recent 6-month pace is trending at 1.85% on an annual basis and shows that inflation is heading where the Fed wants, it will likely just take some time.

The market is expecting that the Fed should start cutting rates at their May 1 meeting. If this translates to lower mortgage rates, the additional home-buying interest would most likely support home prices rising further.

Mortgage Tip provided by Ben Burkett with NFM Lending, 804-833-4303 or This email address is being protected from spambots. You need JavaScript enabled to view it.