Can the inflation drop improve mortgage interest rates?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms.
TL;DR
- Mortgage interest rates have dropped by approximately one percentage point on average since the start of the year.
- The Federal Reserve has implemented three interest rate cuts in the last four months, lowering the federal funds rate by 75 basis points.
- Inflation decreased to 2.7% in November, moving closer to the Federal Reserve's 2% goal.
- Lower inflation and rising unemployment (now at 4.6%) could encourage the Federal Reserve to continue cutting interest rates.
- While further rate cuts are possible, their likelihood is uncertain, with a 26% chance of a January cut according to CME Group's FedWatch tool.
- Borrowers are advised to consider locking in current rates if they fit their budget, as future declines are not guaranteed but possible.