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How Low Will Interest Rates Go In 2024

Performance Property Real Estate Question

Q: I want to refinance my home mortgage. Mortgage rates have finally been falling. How low do you think interest rates will go this year? Corey, Parsippany, NJ

A: The 2 main drivers of mortgage interest rates are 1) current economic conditions like current inflation and the federal funds rate and 2) a borrower’s personal financial profile. A borrower’s personal financial position has a huge impact on the mortgage interest rate they’ll pay on a mortgage which is why everyone that refinances an existing mortgage or buys a home with mortgage financing at the same time will not get the same interest rate. The Fed raised the federal funds rate 11 times between March 2022 and July 2023 to combat inflation. After its December 2023 session, the Fed forecasted it would make three quarter-point cuts by the end of 2024 to lower the benchmark rate to 4.6%. However, the Fed’s guidance is only based on the available economic data they have at any given moment and their decisions going forward are always based on what’s currently happening in the broader economy which nobody can predict. In a recent interview I saw with the Fed Chairman, Jerome Powell, he indicated that inflation has come way down from its high to about 3% and that he wants to lower interest rates this year even if the economy does not reach the Fed’s stated inflation goal of 2%. Exactly how low the Fed funds rate will go before the end of 2024 is anybody’s guess. Thanks for your question, Corey.

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