January’s mortgage rates forecast is for rates to remain relatively high in the short term but, over the course of 2024, remain below 7%. If the Fed begins cutting rates, we may even see them edge closer to 6%, according to Jacob Channel, LendingTree’s senior economist.
The Federal Reserve chose not to raise the federal funds rate at its last meeting of the year. Fed Chairman Jerome Powell offered a fairly positive take on where the economy stands, noting that we’ve seen both inflation and the labor market move in the right direction over the last year. However, he also noted that inflation remains too high, which leaves open the possibility of rate hikes in 2024.
The Federal Reserve will have another opportunity to increase rates in January, but isn’t expected to do so. If the Fed’s cycle of rate hikes is truly over, it could help cool mortgage rates, Channel said. But no one knows for sure when that end will come.