Federal Reserve left its key short-term interest rate unchanged again Wednesday, hinted that rate hikes are likely over and forecast three cuts next year amid falling inflation and a cooling economy.
That’s more rate cuts than many economists expected.
The decision leaves the Fed’s benchmark short-term rate at a 22-year high of 5.25% to 5.5% following a flurry of rate increases aimed at subduing the nation’s sharpest inflation spike in four decades. The central bank has now held its key rate steady for three straight meetings since July.
That provides another reprieve for consumers who have faced higher borrowing costs for credit cards, adjustable-rate mortgages and other loans as a result of the Fed’s moves. Yet Americans, especially seniors, are finally reaping healthy bank savings yields after years of paltry returns.
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Is a soft landing in sight? What the Fed funds rate and mortgage rates are hinting at
Will the Fed raise interest rates again?
The central bank didn’t rule out another rate increase as it downgraded its economic outlook for next year while lowering its inflation forecast. In a statement after a two-day meeting, it repeated that it would assess the economy and financial developments, among other factors, to determine “the extent of any additional (rate hikes) that may be appropriate to return inflation to 2% over time.”
Fed Chair Jerome Powell said at a news conference, noting the Fed’s key rate is “at or near its peak.”
while the Dow Jones Industrial Average closed at a record high after rising 1.4% following the Fed’s signals that it’s probably done lifting rates and is forecasting three cuts next year. The 10-year Treasury was down to about 4% from 4.21% on Tuesday.
Last month, Powell said high Treasury yields, if persistent, likely would constrain the economy and require fewer Fed rate increases,
In its statement Wednesday, however, the central bank didn’t acknowledge the recent decline in Treasury yields, suggesting yields are still relatively high and could spike again, crimping the economy.
“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” the Fed said, repeating the language of its previous statement.
Is inflation really slowing down?
The Fed’s middle-ground approach may have been cemented Tuesday by a mixed report on the consumer price index. The good news was that overall inflation barely budged in November amid falling gasoline prices, pushing down annual price gains to 3.1% from 3.2%, still well above the Fed’s 2% goal.
The Federal Reserve System is the U.S.’s central bank.
When does the Fed meet again?
The first Federal Reserve meeting of the new year will be from Jan. 30 through 31.
Federal reserve calendar
Jan. 30-31
March 19-20
April 30- May 1
June 11-12
July 30-31
Sept. 17-18
Nov. 6-7
Dec. 17-18
The U.S. economy was strong in the third quarter as consumers continued to spend despite high interest rates and inflation.
The value of all services and products generated in the U.S., or GDP, rose at a seasonally adjusted 4.9% for the year in the months spanning July to September, according to the Commerce Department. That was more than twice the 2.1% increase in the previous quarter and the most aggressive pace of growth since the end of 2021 when the economy surged back from a recession sparked by the pandemic.
a recession over the next year, down from the 61% odds forecast in May.
Barclays predicted a loss of roughly 375,000 jobs by the middle of next year. But consumer spending remains robust despite high inflation and interest rates that are making credit card use and consumer loans more expensive. And that may help stave off a recession, says Barclays economist Jonathan Millar.
What does FOMC stand for?
The FOMC is the Federal Open Market Committee, the voting body responsible for setting interest rates. The 12-member committee includes seven members of the Board of Governors and five of the 12 Reserve Bank presidents.
What causes inflation?
Inflation can have many roots. Typically, it’s caused by “a macroeconomic excess of spending over the economy’s relative ability to produce goods and services,” said Josh Bivens, the director of research at the Economic Policy Institute, a left-leaning think tank based in Washington D.C.
That means more people are wanting items and services than there is adequate supply, leading producers to raise prices.
“If everyone in the economy, tomorrow, decided they weren’t going to save any money from their paychecks, and they’re just going to spend every last dollar out of the blue, they would all run to the stores and try to buy things,” Bivens said. “But, producers haven’t produced enough to accommodate that big surge of across-the-board spending. So, you would see prices bid up.”
Inflation can also happen when there are too few producers, or there aren’t enough employees to provide the coveted products and services, Bivens said.
Finally, economies also have some “built-in inflation” to help keep inflation in check. In the U.S., that target is 2%, meaning businesses can raise prices 2% annually year and that shouldn’t overburden consumers. That’s also the typical cost of living raise offered by employers.
Inflation meaning
Inflation is the term for a “generalized rise in prices,” according to Josh Bivens, head of research at the Economic Policy Institute, a left-leaning think tank based in Washington D.C.
Everything from food to rent can become costlier due to inflation. But it is the overall impact that determines what the inflation rate actually is.
“Inflation, though, really is meant to only refer to all goods and services, together, rising in price by some common amount,” Bivens said. The Federal Reserve’s inflation goal is 2%, which means businesses can hike prices by 2% a year and that shouldn’t cause consumers financial distress. Cost of living increases to workers’ pay are also expected to meet that target to ensure consumers can adequately deal with the rising costs of goods and services.
What is CPI?
In November, the Consumer Price Index (CPI) ‒ a measure of the average shift in prices for different products and services ‒ was 3.1%, down slightly from the month before.
Annual inflation is down dramatically from the 9.1% in June 2022 that marked a 40-year high but remains above the 2% target the Fed sees as the level that signals the rate of price increases is under control.
Why is CPI important?
The Federal Reserve watches two key aspects of the economy, price stability and maximum employment, and those are the main factors it takes into account for its interest rate decisions. The CPI is a primary measure the Fed looks at to help determine if prices are “stable.’’
What is the difference between CPI and core CPI?
Core prices don’t count the volatile costs of food and energy items, giving a more accurate window into longer-term trends.
Are wages going up in 2024?
If you’re deemed a top performer at a company that is offering raises, you’ve got a pretty good chance of getting a pay boost next year.
About 3 out of four business leaders told ResumeBuilder.com they intended to give raises. But half of those company executives said only 50% or less of their staff members would see a pay hike, and 82% of the raises would hinge on performance. For those who do manage to get the salary boost, 79% of employers said the pay hikes would be greater than those given in recent years.
Are U.S. Treasury yields rising?
Not recently.
The 10-year Treasury yield was above 5% in November when the Fed kept rates steady for the second consecutive month the first time it had left the key rate unchanged two months in a row in almost two years.
That led to mortgage rates spiking to almost 8% and pushed up other borrowing costs for consumers and businesses. Stocks meanwhile sank close to a recent low, leading Fed Chair Jerome Powell to say such financial pressures could achieve the same cooling effect on the economy as additional rate hikes.
But in the following weeks, 10-year Treasury yields dipped to 4.2% and stocks rebounded. That might make the Fed resist rate cuts in case the economy heats up and causes the broader dip in prices “to stall at an uncomfortably elevated level,” Barclays says.
Barclays and Goldman Sachs forecast that rate cuts won’t happen until the spring, and that there will be only two, to a range of 4.75% to 5%, with more cuts implemented in the next two years.
When will inflation go back to normal?
It may take a little while.
Inflation’s decline likely “won’t show much progress in coming months,” Barclays wrote in a research note.
Overall price hikes have eased significantly since peaking at 9.1% in June 2022, a four-decade high. And in October, broader inflation as well as core prices experienced a dip, leading to a lower 10-year Treasury yield.
But core prices, which exclude the volatile costs of food and energy, will probably rise 0.3% each of the next three months, Goldman Sachs says. Used cars and furniture have been getting cheaper as the supply-chain shortages of the pandemic end. Meanwhile, health care, auto repairs, car insurance and rent continue to get more expensive, as employers pay higher wages to attract workers amid a labor shortage lingering from the global health crisis.
What is core inflation right now?
Core prices, which leave out the more volatile costs of food and energy, bumped up 0.3% in November, slightly more than the 0.2% uptick seen the previous month. That kept the yearly increase at 4%, the lowest rate since September 2021.
New inflation tax brackets
Inflation may also impact the amount of taxes you have to pay.
The Internal Revenue Service said in its annual inflation adjustments report that there will be a 5.4% bump in income thresholds to reach each new level in next year’s tax season.
In 2024, the lowest rate of 10% will apply to individuals with taxable income up to $11,600 and joint filers up to $23,200. The top rate of 37% will apply to individuals earning over $609,350, and married couples filing jointly who make at least $731,200 a year.
The IRS makes these adjustments annually, using a formula based on the consumer price index to account for inflation and stave off “bracket creep,” which happens when inflation shifts taxpayers into a higher bracket though they’re not seeing any real rise in pay or purchasing power.
The 2024/25 increase is less than last year’s 7% increase, but much more than recent years when inflation was below the current 3.1% inflation rate.
Will Social Security get a raise because of inflation?
Yes, but it will be a lot less than what recipients received in 2023.
The cost-of-living adjustment, or COLA, to Social Security benefits will be 3.2% next year. That’s roughly one-third of the 8.7% increase given in 2023, which marked a forty-year high.
The 2024 COLA hike is above the average 2.6% raise recipients have received over the past two decades, but seniors remain concerned about being able to pay their expenses as well as the increasing possibility Social Security benefits will be reduced in coming years, according to a retirement survey of 2,258 people by The Senior Citizens League, a nonprofit seniors group.
How does raising rates lower inflation?
The federal funds rate is what banks pay each other to borrow overnight. If that rate increases, banks usually pass along that extra cost, meaning it becomes more expensive for businesses and consumers to borrow as rates rise on credit cards, adjustable rate mortgages and other loans. That’s why the funds rate is the key mechanism used by the Federal Reserve to calm inflation.
Simply put, companies and consumers don’t borrow as much when loans cost them more, and that means an overheated economy can cool and inflation may dip.
Will credit card interest rates continue to rise this holiday season?
The Fed’s string of rate hikes, aimed at easing the highest inflation in four decades, are a big reason credit card interest rates have reached record highs just in time for the holiday season.
Some retail credit cards now charge more than 33% interest, topping a 30% threshold that stores and banks were previously able to bypass but seldom did – until now.
“They can charge that much,” said Chi Chi Wu, a senior attorney at the nonprofit National Consumer Law Center. “Credit cards can actually charge whatever they want. It’s a little-known fact.”
The domino effect of a high benchmark rate and soaring credit card interest could put many Americans in financial straits this holiday season.
Though some consumers are paring back to deal with high prices, rising debt and shrinking savings, the average shopper expects to spend $1,652 this year on holiday purchases, according to the consultancy Deloitte, more than was typically spent in the last three years.
A lot of the buying will be done with credit cards. In an October poll of 1,036 shoppers by CardRates.com, nearly 4 in 10 respondents said they intend to have holiday credit card debt in the new year.
The nation’s collective credit card debt was $1.08 trillion, at the end of September, a record high. And the average interest rate was 21%, the highest ever documented by the Federal Reserve.
Savings account impact of high rates
The upside to the Fed’s string of rate hikes has been that consumers were able to earn good interest on their savings for the first time in years. Even when the Fed leaves interest rates unchanged, savers can do well.
Unfortunately, most account holders aren’t making the most of that potential opportunity.
Roughly one-fifth of Americans who have savings accounts don’t know how much interest they’re earning, according to a quarterly Paths to Prosperity study by Santander US, part of the global bank Santander. Among those who did know their account’s interest rate, most were earning less than 3%.
But consumers have time to make a change that could enable them to make more from their savings.
“We’re still a long way from (the Fed) beginning to cut rates,” said Greg McBride, chief financial analyst at financial services platform Bankrate. “This is great news for savers, who will continue to enjoy inflation-beating returns in the top-yielding, federally insured online savings accounts and certificates of deposit. For borrowers, interest rates staying higher for a longer period underscores the urgency to pay down and pay off costly credit card debt and home equity lines.”
The string of Fed rate hikes that began in March 2022 has made it costlier for consumers to borrow as interest rates on credit cards and other loans increased dramatically.
At the same time, inflation has made daily needs more expensive, pushing more Americans to lean on credit cards to get by. But lenders have become more reluctant to issue new cards, so in the midst of the holiday season, more shoppers are seeking higher credit limits, experts say.
In October, the application rate for higher limits rose to 17.8% from 11.2% in the same month the previous year, and from 12.0% in 2019, New York Fed data showed.
For some consumers, a higher limit on a card they already have is about their only option.
“After COVID, inflation and interest rates went out of control … people have less emergency funds for car repairs or buying presents,” said Brandon Robinson, president and founder of JBR Associates, which specializes in retirement strategies. “What they’re doing is using more credit card utilization – over 30% or well over 50% of their credit card allowance – and then can’t get approved for another card because their credit rating is down.”
Inflation is leading more Americans to work multiple jobs
The number of Americans working at least two jobs is at its highest peak since before the COVID-19 pandemic, according to federal data, an uptick that may reflect the financial pressure people are feeling amid high inflation.
Almost 8.4 million people had multiple jobs in October, the Labor Department said, a figure that represents 5.2% of the laborforce, the highest percentage since January 2020.
“Paying for necessities has become more of a challenge, and affording luxuries and discretionary items has become more difficult, if not impossible for some, particularly those at the lower ends of the income and wealth spectrums,” Mark Hamrick, senior economic analyst at Bankrate, told USA TODAY in an email.
People may also be moonlighting to sock away cash in case they’re laid off since job cuts typically peak at the start of a new year.
What is the Federal Reserve’s 2024 meeting schedule? Here is when the Fed will meet again.
What is the mortgage interest rate today?
Mortgage rates are falling, so is it time to buy?
It depends.
First of all, the Fed doesn’t directly set mortgage rates, but its actions have an impact. For instance, when the central bank was steadily boosting its key rate, the yield on the 10-year treasury bond went up as well. Because those bonds are a gauge for the interest applied to an average 30-year loan, mortgage rates increased.
But over the past six weeks, mortgage rates have been declining, averaging 7% for a 30-year fixed mortgage. That’s down from almost 7.8% at the end of October, according to data released by Freddie Mac on Dec. 7.
That may be giving some wannabe homeowners the confidence to start house hunting. For the week ending Dec. 1, mortgage applications rose 2.8% from the prior week, according to the Mortgage Bankers Association.
“However, in the big picture, mortgage rates remain pretty high,” says Danielle Hale, senior economist for Realtor.com. “The typical mortgage rate according to Freddie Mac data is roughly in line with what we saw in August and early to mid-September, which were then 20 plus year highs.”
So, many potential buyers may still need to sit on the sidelines, waiting for rates to drop further, says Sam Khater, chief economist for Freddie Mac. Hale and many other experts believe mortgage rates will dip next year.
Interest rate projection 2024
The Fed is expected to cut interest rates next year, though markets and economists disagree about how many rate cuts there will be.
Futures markets forecast there will be four or five rate cuts in 2024, amounting to a quarter of a percentage point each. The cuts, they predict, should start by spring, and ultimately drop interest rates as low as 4% to 4.25%.
But core prices, which leave out the volatile costs of food and energy and are the metric followed more closely by the Fed, ticked up 0.3% in November, higher than the 0.2% increase the month before. That might make the Fed more hesitant to nip rates in the immediate future.
Goldman Sachs and Barclays expect there to be only two rate decreases in 2024. And Fed Chair Jerome Powell has cautioned in recent public remarks that it was “premature” to talk about rate cuts.
November inflation report
Inflation dipped slightly last month, with falling gas prices mitigating the impact of rising rents.
Consumer prices overall increased 3.1% from a year earlier, slightly below the 3.2% rise in October, according to the Labor Department’s consumer price index. That slower pace moves the inflation rate nearer to the level, reached in June, that was the lowest in over two years. Month over month, prices increased a slight 0.1%.
Core prices, however, which leave out the more erratic costs of food and energy and which are more closely monitored by the Fed, increased 0.3% in November after rising 0.2% the previous month. That means core inflation’s yearly increase remained at 4%, though it’s the lowest level since September 2021.
Over the past year and change, mortgage refinance applications have fallen off a cliff.
We had some of the biggest refi years in 2020 and 2021, followed by the worst year for mortgage applications this century.
And it’s all because mortgage rates hit all-time lows, then abruptly surged to around 8% in just over 12 months.
Rates on the 30-year fixed have since settled in around 7%, and there’s hope they’ll continue to drop into 2024.
If so, we might see a return to rate and term refinancing as recent home buyers seek out payment relief.
Does Anyone Refinance Their Mortgage Anymore?
As noted, mortgage refinancing hasn’t been very popular in 2023. After a few banner years, the low-rate mortgage party came to an end.
After all, most homeowners already took advantage when rates were low. And very few are forgoing their 2-4% mortgage rate to tap into their home equity.
Instead, they’re opting for a second mortgage if they need money, such as a home equity loan or HELOC.
This allows them to retain their low-rate first mortgage while still accessing their equity.
But because mortgage rates have hovered in the 6-8% range for much of the past year, and rates have since improved a bit, the refi applications are beginning to trickle in.
Per the latest Originations Market Monitor report from Optimal Blue, the 30-year fixed improved by 67 basis points during the month of November.
For some lenders, we’re talking a rate drop from around 8% to 7%. This resulted in a 10% month-over-month increase in rate and term refinance applications.
If rates continue to move lower, we might see apps rise even more in 2024.
And because many recent mortgage holders have very high rates, payment relief will actually be easier to come by. Allow me to illustrate.
Remember those 3% mortgage rates that were available in 2021? Well, lots of homeowners with higher-rate mortgages took advantage.
Many were able to reduce their rate from 5% to 3%, saving hundreds per month in the process.
Using our same $500,000 loan amount, the monthly P&I would drop from $2,684.11 to $2,108.02.
That’d represent a monthly savings of $576. While still a big reduction in payment, it’s about $100 less than the prior scenario of going from an 8% mortgage rate to a 6% mortgage rate.
This is why I don’t subscribe to a certain refinance rule of thumb, such as the 1% rule or some other fixed number.
There are countless scenarios, and what works for one borrower may not work for another.
As you can see, it’s easier to save money when refinancing a high-rate mortgage than it is a low-rate mortgage.
Simply put, there’s more room to save if your home loan has a higher interest rate.
Conversely, if you already have a low-rate mortgage, the savings are diminished because your interest expense is small to begin with.
What this means is as mortgage rates improve, borrowers with high-rate loans will find themselves “in the money” for a refinance more easily.
After all, if you can save more money each month, offsetting any upfront costs associated with the refinance will be less of a task. You’ll be able to break even quicker.
And you’ll enjoy more payment relief.
Lastly, your overall interest savings will be greater. We’re talking $242,000 in savings going from 8% to 6% versus $207,000 when going from 5% to 3%.
Over the past two years, travelers have packed airports, hotels and destinations with a fervor that earned the post-pandemic trend a label: “revenge travel.”
Demand from leisure travelers soared at hotels in 2022 as travel restrictions subsided. This year, Americans flocked to popular European cities faster than they did in 2019. From June to October 2023, TSA recorded seven of its 10 busiest days ever at U.S. airport checkpoints — and then the all-time single-day record for passenger traffic was set on Nov. 26.
Now, there’s a lingering question as 2024 approaches: Might revenge travel finally end?
Industry leaders split on the future of revenge travel
Ask 10 people in the travel industry, and you may get 10 different opinions.
At one end of the spectrum, some airlines continue to report that travelers are more than willing to pay for high-end business class seats, especially on long-haul overseas flights.
“Our core customer base is in a healthy financial position,” Ed Bastian, CEO of Delta Air Lines, said during the company’s most recent earnings call (a sentiment United Airlines executives noted on their third-quarter earnings call, too).
Some hotel executives are echoing the optimism. Despite economic uncertainty, “The consumer is still generally holding up well,” said Leeny Oberg, Marriott’s chief financial officer, during the company’s November earnings call.
But other companies are starting to notice some changes.
Some airlines have reported decreased demand in recent months, contributing to financial losses. For instance, Southwest Airlines is pulling back on plans to keep growing its flight schedule in 2024, noting leisure travel trends have looked less strong and more like pre-pandemic times in recent months.
“There is no doubt that there is a slowdown occurring,” says John Grant, chief analyst at travel data firm OAG. “We’re talking about a softening. We’re not talking about a nosedive.”
Reasons revenge travel may not last
Consumer costs mounting
Though inflation has cooled from its peak in June 2022, many everyday expenses such as groceries and rent remain more expensive than before the pandemic.
Plus, consumers now face high interest rates, resumed student loan repayments and, for many, a smaller pandemic savings cushion, says Cara McDaniel, a professor specializing in macroeconomics at Arizona State University’s W.P. Carey School of Business.
“Life is looking a little less affordable,” McDaniel says. “People, even if they are OK, might not be feeling the urge to splurge. So I imagine that’s going to drag on travel.”
A return to ‘normal’
There’s also the theory that a return to more traditional routines is inevitable.
“People traveled more frequently, or spent more on extravagant vacations after being unable to do so during the pandemic. Now, most travelers are reverting to regular travel spending habits,” Emmy Hise, senior director of hospitality analytics at data firm CoStar, said in an email.
She noted that hotels at popular U.S. vacation destinations started seeing demand slide this past spring — though while still outpacing 2019.
Why revenge travel could stick around
More approachable travel prices
According to NerdWallet’s most recent Travel Price Index, the overall cost of travel in October was down about 2% from the same month in 2022, helped primarily by cheaper airfare.
As airlines have hired staff and brought planes back into service, the supply and demand equation is more favorable for consumers than it was a year or two ago.
During this fourth quarter of 2023, the eight largest U.S. carriers are flying with nearly 17% more seats compared with the fourth quarter of 2021, according to airline scheduling data from aviation analytics firm Cirium.
To entice travelers to buy tickets, Southwest executives told analysts they’ve had to offer cheaper tickets on less crowded days like Tuesdays and Wednesdays. Other airlines (particularly low-cost carriers) have offered steep discounts and promotions of late, too.
For travelers, more approachable prices could be reason enough to book another trip.
Bucket lists still unsatisfied
Several industry leaders have also cited an enduring willingness from consumers to spend on travel and sacrifice other purchases instead.
Michael Daher, vice chair and U.S. transportation and hospitality leader at consulting firm Deloitte, said in an email that his team has tracked an “overall decline in financial well-being” over the last year, including still growing concerns about savings.
But, he added, the company’s survey data also suggests consumers hope to travel nonetheless, perhaps merely electing to fly on a cheaper ticket type, like basic economy.
“We may be moving from ‘revenge travel’ to a period of reprioritization that values travel highly,” Daher said.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
While mortgage rates have seen some dips in recent weeks, rates are still higher than they were a year ago. And though there’s plenty of interest in homeownership, it’s still difficult for most people to afford to purchase a house.
A number of closely followed mortgage rates slumped over the last seven days. 15-year fixed and 30-year fixed mortgage rates both decreased. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, also saw rates trending downward.
High interest rates and house prices, together with limited for-sale inventory, have effectively kept a lid on homebuying demand throughout 2023. That was especially clear when mortgage rates surged past 8% in October, causing new-home sales to fall by 5.6% and existing-home sales to fall by 4.1% from the prior month.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Once the average rate for a 30-year fixed mortgage fell below 8% in early November, home loan applications started slowly inching up, according to the Mortgage Bankers Association. Mortgage interest rates, which are influenced by macroeconomic factors, such as inflation, job growth and the bond market, as well as investor confidence and global events, are always somewhat volatile. But experts note that changing economic conditions, particularly slowing inflation, could help mortgage rates stabilize in 2024.
Today’s average mortgage interest rates
If you’re in the market for a home, check out how today’s mortgage rates compare to last week’s. We use data collected by Bankrate to track rate changes over time. This table summarizes the average rates offered by lenders across the country:
Average mortgage interest rates
Product
Rate
Last week
Change
30-year fixed
7.32%
7.53%
-0.21
15-year fixed
6.74%
6.80%
-0.06
30-year jumbo mortgage rate
7.39%
7.59%
-0.20
30-year mortgage refinance rate
7.46%
7.63%
-0.17
Rates as of December 12, 2023.
Where mortgage rates are headed
At the start of the pandemic, mortgage rates were near record lows, around 3%. That all changed as inflation began to surge and the Federal Reserve kicked off a series of aggressive interest rate hikes, which indirectly drove up mortgage rates. Now, 20 months after the Fed’s first increase in March 2022, mortgage rates are well above 7%.
The central bank has kept interest rates steady since late July, but mortgage rates continued to climb until fairly recently. Following the Fed’s November meeting, mortgage rates dropped lower for the first time in months due to a mix of economic factors, including a shift in the 10-year Treasury yield, weaker jobs data and a better-than-expected inflation report.
Any mortgage forecast is simply an estimate, but experts say that improved inflation data and an end to the Fed’s rate-hike cycle could be signaling the start of a slow recovery in home loan rates. Most major housing authorities predict average mortgage rates to return to the 6% range around mid-2024.
“Rates will hold steady in the near term, except in the event of unexpected news or developments,” said Matt Dunbar, senior vice president of Southeast Region at Churchill Mortgage. The Fed, which is in a holding pattern to collect more data, will likely stay the course with a rate pause unless there are unwelcome surprises in the December inflation and jobs reports.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
What is a good loan term?
When picking a mortgage, remember to consider the loan term, or payment schedule. The most common mortgage terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages can either be fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are set for the duration of the loan. The interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the current interest rate in the market.
When choosing between a fixed-rate and adjustable-rate mortgage, consider the length of time you plan to live in your home. If you plan on living long-term in a new house, a fixed-rate mortgage may be the better option. Fixed-rate mortgages offer more stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. As a result, a growing share of homebuyers are leaning toward ARMs.
30-year fixed-rate mortgages
The 30-year fixed-mortgage rate average is 7.32%, which is a decrease of 21 basis points from seven days ago. (A basis point is equivalent to 0.01%.) A 30-year fixed mortgage, the most common loan term, is a good option if you’re looking to minimize your monthly payment. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one, but often a higher interest rate.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.74%, which is a decrease of 6 basis points from the same time last week. Though you’ll have a bigger monthly payment compared to a 30-year fixed mortgage, a 15-year loan will usually be the better deal if you can afford the monthly payments. You’ll usually be able to get a lower interest rate, pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 adjustable-rate mortgage has an average rate of 6.67%, a downtick of 11 basis points from the same time last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. But you could end up paying more after that time, depending on how the rate adjusts with the market rate. For borrowers who plan to sell or refinance their house before the rate changes, an ARM could be a good option. If not, changes in the market may significantly increase your interest rate.
How to find personalized mortgage rates
You can get a personalized mortgage rate by contacting your local mortgage broker or using an online calculator. To find the best home mortgage, take into account your goals and current finances. Be sure to look at the annual percentage rate, or APR, which reflects the mortgage interest rate plus other borrowing charges. By comparing the total cost of borrowing from multiple lenders, you can make a more accurate apples-to-apples comparison.
Your specific mortgage rate will vary based on factors including your down payment, credit score, debt-to-income ratio and loan-to-value ratio. Having a higher down payment, a good credit score, a low DTI and LTV or any combination of those factors can help you get a lower interest rate.
The interest rate isn’t the only factor that affects the cost of your home. Be sure to also consider fees, closing costs, taxes and discount points. You should shop around and talk to several different lenders from local and national banks, credit unions and online lenders to find the best mortgage for you.
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right for you.
Increase in urbanization and rise in consumer interests for home decor drive the growth of the home decor market.
WILMINGTON, Del., Dec. 5, 2023 /PRNewswire/ — Allied Market Research published a report, titled, “Home Decor Market By Product Type (Home Textile, Floor Covering, and Furniture), Price (Premium and Mass), Distribution Channel (Supermarkets And Hypermarkets, Specialty Stores, E-Commerce, and Others), and Income Group (Lower-Middle Income, Upper-Middle Income, and Higher Income): Global Opportunity Analysis and Industry Forecast, 2023-2032”. According to the report, the global home decor market size was valued at $647.4 million in 2022, and is projected to reach $1.1 billion by 2032, growing at a CAGR of 4.9% from 2023 to 2032.
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Prime determinants of growth
The home decor market is a dynamic and ever-evolving industry, shaped by a blend of prevailing trends, growth factors, and industry obstacles. Notably, the industry is witnessing surge in sustainability practices and environmentally conscious product choices as a prominent trend. Consumers are increasingly seeking eco-friendly solutions, further increasing the shift towards responsible consumption. Furthermore, technological innovations, particularly the integration of smart home solutions, are driving transformative changes in the sector. The digital sector has emerged as a crucial platform for businesses as consumers increasingly opt for online shopping. The COVID-19 pandemic accelerated this transition, emphasizing the need for a strong online presence in the home decor sector.
Nevertheless, tariffs and trade restrictions limit the supply chain, affecting the cost and availability of raw materials, and subsequently, influencing pricing and profit margins. Economic fluctuations and shifting consumer tastes are projected to introduce volatility into the market. Despite these limitations, the home decor market offers different business opportunities. Collaborations with local artisans and the innovative use of eco-friendly materials can open up niche markets.
Report coverage & details:
Report Coverage
Details
Forecast Period
2023–2032
Base Year
2022
Market Size in 2023
$647.4 Million
Market Size in 2032
$1.1 billion
CAGR
4.9 %
No. of Pages in Report
444
Segments Covered
Product Type, Price, Distribution Channel, Income Group, and Region
Drivers
Increase in consumer interest toward home décor
Increase in urbanization worldwide
Opportunities
Improvement in lifestyle
Smart home decor
Restraints
Increase in cost of raw materials
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The floor covering segment to maintain its leadership status during the forecast period
By product type, the floor covering segment held the highest market share in 2022, accounting for less than half of the global home decor market revenue, and is estimated to maintain its leadership status during the forecast period. Floor covering products are made from materials such as tiles, wood & laminate, vinyl, and rubber. Awareness regarding wastage and recycling has increased significantly. Thus, recycled flooring materials such as wood & laminate and tiles had an impact on the market for flooring products. Consumers have shown high acceptance for stylish floor covering products, which are cost-effective and eco-friendly. However, the home textile segment is projected to attain the highest CAGR of 4.9% from 2023 to 2032.
The mass segment to maintain its leadership status during the forecast period
By price, the mass segment held the highest market share in 2022, accounting for more than three-fifths of the global home decor market revenue, and is estimated to maintain its leadership status during the forecast period Increase in consumption of mass pricing products by lower-middle and upper-middle class consumers significantly contributes toward the growth of the market. The cost of these products does not include the security or insurance charge. In addition, the premium segment is projected to attain the highest CAGR of 5.3% from 2023 to 2032. Luxury brands are intended to have symbolic and experiential benefits in terms of prestige and social status. The ingredients used in luxury confections are of premium quality and naturally sourced.
The specialty stores segment to maintain its leadership status during the forecast period.
By distribution channel, the specialty stores segment held the highest market share in 2022, accounting for less than half of the global home decor market revenue, and is estimated to maintain its leadership status during the forecast period. Consumers prefer to analyze and evaluate products before purchase, thereby boosting the retail sales of home décor products through specialty store. In addition, the e-commerce segment is projected to attain the highest CAGR of 5.3% from 2023 to 2032.
Asia-Pacific to maintain its dominance by 2032
Region-wise, Asia-Pacific held the highest market share in terms of revenue in 2022, accounting for nearly one-third of the global home decor market revenue. Changes in lifestyles of the people in the region have influenced buying trends of consumers. Young families mostly spend on floor covering and furniture. Consumers in the region prefer buying home décor products from specialty stores and departmental stores. Online buying trend is emerging in the region, which significantly contributes toward the growth of the market. In addition, the LAMEA region is also expected to witness the fastest CAGR of 5.6% from 2023 to 2032 and is likely to dominate the market during the forecast period.
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Leading Market Players: –
Mannington Mills Inc.
Mohawk Industries Inc.
Shaw Industries Group, Inc.
Ashley Furniture Industries Ltd.
Inter IKEA Systems BV
Forbo International SA
Herman Miller Inc.
Duresta Upholstery Ltd.
Kimball International
Armstrong World Industries, Inc.
The report provides a detailed analysis of these key players in the global home decor market. These players have adopted different strategies such as new Distribution Channel launches, collaborations, expansion, joint ventures, agreements, and others to increase their market share and maintain dominant shares in different regions. The report is valuable in highlighting business performance, operating segments, Distribution Channel portfolio, and strategic moves of market players to showcase the competitive scenario.
Read More Trending “AMR Exclusive Insights:
• DIY Home Decor Market Opportunity Analysis and Industry Forecast, 2021-2031 • Sustainable Home Decor Market Opportunity Analysis and Industry Forecast, 2021-2031 • Home Decor And Accessories Market Opportunity Analysis and Industry Forecast, 2023-2032 • Textile Home Decor Market Opportunity Analysis and Industry Forecast, 2023-2032 • U.S. Home Decor Market Opportunity Analysis and Industry Forecast, 2020-2027
About Us:
Allied Market Research (AMR) is a full-service market research and business-consulting wing of Allied Analytics LLP based in Wilmington, Delaware. Allied Market Research provides global enterprises as well as medium and small businesses with unmatched quality of “Market Research Reports” and “Business Intelligence Solutions.” AMR has a targeted view to provide business insights and consulting to assist its clients to make strategic business decisions and achieve sustainable growth in their respective market domain.
Pawan Kumar, the CEO of Allied Market Research, is leading the organization toward providing high-quality data and insights. We are in professional corporate relations with various companies and this helps us in digging out market data that helps us generate accurate research data tables and confirms utmost accuracy in our market forecasting. Each and every data presented in the reports published by us is extracted through primary interviews with top officials from leading companies of domain concerned. Our secondary data procurement methodology includes deep online and offline research and discussion with knowledgeable professionals and analysts in the industry.
Contact:
David Correa 1209 Orange Street, Corporation Trust Center, Wilmington, New Castle, Delaware 19801 USA. USA/Canada (Toll Free): +1-800-792-5285 UK: +44-845-528-1300 Hong Kong: +852-301-84916 India (Pune): +91-20-66346060 Fax: +1-800-792-5285 [email protected]: www.alliedmarketresearch.comAllied Market Research Blog: https://blog.alliedmarketresearch.com/consumer-goods
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Nonfarm Payrolls (NFP)–the headline component of the big jobs report came in higher than expected today. Adding to the challenges for the bond market, the unemployment rate ticked down to 3.7% from 3.9% previously (also the forecast for today). Given the stakes, we wouldn’t have been surprised to see a sharper spike in rates today. Treasuries know… They spiked 8bps–not huge, but in the range of likely reactions based on the data. So what’s up with MBS only losing an eighth of a point? It’s not a duration issue (after all, 5yr Treasuries had a worse day than 10s). One of the only ways to reconcile the outperformance is to consider apprehension ahead of next week’s Treasury auction cycle. Everything else that merits apprehension (like CPI and Fed Day) would apply to MBS as well as Treasuries.
Nonfarm Payrolls
199k vs 180k f’cast, 150k prev
Unemployment Rate
3.7 vs 3.9 f’cast, 3.9 prev
Participation Rate
Wages
0.4 vs 0.3 f’cast, 0.2 prev
Consumer Sentiment
69.4 vs 62.0 f’cast
1yr inflation expectations
Down 1.4% (huge move)
5yr inflation expectations
08:39 AM
Modestly weaker before jobs data and much weaker after. 10s up 9.5bps at 4.243 and MBS down half a point.
10:59 AM
MBS off weakest levels, mostly due to improved liquidity, now down 9 ticks (.28) on the day. 10yr up 9.9bps at 4.247
12:03 PM
Back to weakest levels now with 10s up 11+ bps at 4.26. MBS down roughly 3/8ths in 6.0 coupons and half a point in 5.5 coupons.
02:29 PM
Back up to the best levels of the day now. MBS down only an eighth. 10yr recovering as well, up 8.3bps at 4.231.
04:45 PM
MBS going out at highs, but not really higher than the last update (still down an eighth). 10yr also in similar territory, up 8bps at 4.228.
Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.
Our experts answer readers’ home-buying questions and write unbiased product reviews (here’s how we assess mortgages). In some cases, we receive a commission from our partners; however, our opinions are our own.
Mortgage rates have been steadily dropping, and they fell even further this week. So far in December, 30-year mortgage rates have been holding steady below 7%.
On Friday, the Bureau of Labor Statistics released the November jobs report, which showed that the labor market is strong but continuing to normalize.
This is good news for mortgage rates, since it means that the Federal Reserve will likely keep the federal funds rate steady at its meeting next week. Markets even believe we could see some Fed rate cuts next year, which would likely cause mortgage rates to go down in 2024.
However, the effects of the Fed’s hikes over the past couple of years are still playing out, and inflation remains a bit elevated. As long as inflation and the labor market continue to cool, mortgage rates should as well. But Fed officials have said they are willing to hike rates further if necessary, which could push mortgage rates back up.
“The recent rapid decline in rates – in particular, the mortgage rate is down nearly 80 basis points since the end of October – along with continued job growth are beneficial for homebuyers; however, if labor markets remain this strong, we believe the pace of mortgage rate declines will likely not continue in the near term or may partially reverse,” Mark Palim, deputy chief economist at Fannie Mae, said in an email.
Mortgage Rates Today
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Average rate today
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Mortgage Refinance Rates Today
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Mortgage Calculator
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
Mortgage Calculator
$1,161 Your estimated monthly payment
Total paid$418,177
Principal paid$275,520
Interest paid$42,657
Paying a 25% higher down payment would save you $8,916.08 on interest charges
Lowering the interest rate by 1% would save you $51,562.03
Paying an additional $500 each month would reduce the loan length by 146 months
By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.
Mortgage Rate Projection for 2023
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022.
Rates have increased even further this year, though they may fall soon as inflation continues to slow. In the last 12 months, the Consumer Price Index rose by 3.2%, a significant slowdown compared to when it peaked last year at 9.1% in June.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of the best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
When Will House Prices Come Down?
Home prices declined a bit on a monthly basis late last year, but we aren’t likely to see huge drops anytime soon thanks to extremely limited supply.
Fannie Mae researchers expect prices to increase 6.7% in 2023 and 2.8% in 2024, while the Mortgage Bankers Association expects a 5.7% increase in 2023 and a 4.1% increase in 2024.
Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates may start to drop next year, which would remove some of that pressure. The current supply of homes is also historically low, which will likely keep prices from dropping.
Fixed-Rate vs. Adjustable-Rate Mortgage Pros and Cons
Fixed-rate mortgages lock in your rate for the entire life of your loan. Adjustable-rate mortgages lock in your rate for the first few years, then your rate goes up or down periodically.
So how do you choose between a fixed-rate vs. adjustable-rate mortgage?
ARMs typically start with lower rates than fixed-rate mortgages, but ARM rates can go up once your initial introductory period is over. If you plan on moving or refinancing before the rate adjusts, an ARM could be a good deal. But keep in mind that a change in circumstances could prevent you from doing these things, so it’s a good idea to think about whether your budget could handle a higher monthly payment.
Fixed-rate mortgage are a good choice for borrowers who want stability, since your monthly principal and interest payments won’t change throughout the life of the loan (though your mortgage payment could increase if your taxes or insurance go up).
But in exchange for this stability, you’ll take on a higher rate. This might seem like a bad deal right now, but if rates increase further in a few years, you might be glad to have a rate locked in. And if rates trend down, you may be able to refinance to snag a lower rate
How Does an Adjustable-Rate Mortgage Work?
Adjustable-rate mortgages start with an introductory period where your rate will remain fixed for a certain period of time. Once that period is up, it will begin to adjust periodically — typically once per year or once every six months.
How much your rate will change depends on the index that the ARM uses and the margin set by the lender. Lenders choose the index that their ARMs use, and this rate can trend up or down depending on current market conditions.
The margin is the amount of interest a lender charges on top of the index. You should shop around with multiple lenders to see which one offers the lowest margin.
ARMs also come with limits on how much they can change and how high they can go. For example, an ARM might be limited to a 2% increase or decrease every time it adjusts, with a maximum rate of 8%.
Today’s inflation reports show that Federal Reserve rate cuts are in play in 2024 — not because of the labor market breaking, but because real rates are too high. If the labor market gets weaker, meaning jobless claims break over 323,000 on the four-week moving average, we can get even more rate cuts. The labor market is not there yet so for now we can focus on the fact that the Fed overhiked, and because of that, they have room to cut.
The Fed can’t avoid the reality that existing home sales are at record lows and the Fed should be pro-housing again, something I discussed on this HousingWire Daily podcast.
Let’s dig into the report to find out why the Fed can now discuss rate cuts for next year.
From BLS: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in November on a seasonally adjusted basis, after being unchanged in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 3.1 percent before seasonal adjustment.
Tuesday’s report showed inflation was a bit stronger than anticipated, but it was boosted by rents and used car prices, both of which have longer-term disinflationary futures in store for them. If you take shelter inflation out of the equation, CPI is running at 1.4%, so the lagging shelter data keeps the CPI report artificially higher than it should be and the Fed knows this. Core CPI would be much lower today if we had real-time rent data.
Shelter inflation is also 44.4% of the index so it’s the most significant component of the CPI index. Back in September 2022 on CNBC, I talked about rents falling, which will be more of a positive story in 2023 as this data line lags badly. Everyone is on the same page on this and the chart below again shows shelter inflation being high but in real terms, it’s much lower than that today.
What does this mean for the Fed meeting on Wednesday? I am not a Fed pivot person: I don’t think the Fed will reverse course until the labor market breaks. So, when we are talking about rate cuts next year, that has to do more with the Fed over-hiking starting in 2022 to make sure the growth rate of inflation fell. With where inflation is going, they can cut rates a few times and still be in restrictive policy if the growth rate of inflation falls even more.
The 10-year yield has fallen dramatically from the recent peak of around 5%, currently at 4.22%. So, the market has loosened financial conditions a bit already but more needs to happen for housing to get going again. Mortgage rates should be below 6% today, but the spreads are still very restrictive in the mortgage market. With the growth rate of inflation falling, this needs to change.
What I would take away from today’s inflation data is that the trend is your friend: the growth rate of inflation has been falling for some time now. The Fed policy is still too restrictive for housing and hopefully the Fed gets a wake-up call and can be pro-housing once again, giving up it’s “stay-at-home” housing economic policy sooner than later.
It’s worth noting that inflation is falling without a job loss recession. Bond yields will head even lower if the labor market gets weaker as they won’t wait for the Fed to act. Hopefully, in tomorrow’s Fed meeting we will see that they’re on the same page and we can all land the plane.
In the mortgage business, November typically represents the start of the slow season. While mortgage rates cooled down significantly from October, it wasn’t enough to overcome seasonal, historic trends and low levels of inventory.
Lock volume declined 10% last month from October, driven by a 12% drop in purchase locks, according toOptimal Blue’s originations market monitor report.
“Cooling economic indicators and dovish commentary from the Federal Open Market Committee (FOMC) meeting at the beginning of November drove a rally in rates across mortgage products,” said Brennan O’Connell, data solutions manager at Optimal Blue.
Following the Federal Reserve’s decision to hold rates steady in November, the spread between the 30-year conforming rate and the 10-year Treasury narrowed by 16 basis points (bps) to 274 bps – the lowest since March.
The Optimal Blue Mortgage Market Indices (OBMMI) 30-year conforming rate dropped 67 bps in November, finishing the month at 7.11%. Jumbo rates fell 34 bps to 7.61%, FHA dropped 54 bps to 6.90%, and VA dropped 61 bps to 6.79%.
The recent decline in rates incentivized borrowers who took out loans over the last few months to refinance – driving up refi volume by 2% month over month to reach its highest level since February.
The refinance climb included 10% month-over-month growth in rate/term refinance volume, while cash-out refi volume remained essentially flat from October.
Purchase lock counts, which exclude the impact of changes in home prices, were down 13% year over year and 37% from pre-pandemic levels in 2019.
Nonconforming products – including jumbo and expanded guidelines loans – gave up share in November, dropping from 12% to 10% of total production month-over-month.
Origination volume from FHA products rose to 23% of total production in November, up 1% from October.
Other products remained mostly flat in production – including GSE-eligible products at 56%, VA products at 10%, and USDA products at 1%.
The steep drop in rates drove down ARM shares to 6.5% in November from 7.9% in October.
Most metropolitan statistical areas (MSAs) experienced declines in rate lock volume, with the exception of Orlando, Florida (6%), which saw growth in production, and New York, New York (0.9%) and San Antonio, Texas (-0.5%), which both remained flat in month-over-month volume.
The average loan amount dropped to $347,400 from $352,500 and the average purchase price saw the largest decline since October 2022, falling to $438,300 in November from $449,300 the previous month.
“Historic affordability issues are keeping buyers on the sideline and forcing sellers to reduce their expectations,” O’Connell added. “This may signal a downward trend in home prices after an extended period of steady growth.”
Mortgage rates are based on bonds and the bond market is coming off an important and largely successful week. It was important because it was the first week since the November 14th Consumer Price Index (a key inflation report that often causes movement in rates) that brought other economic data of similar significance. It was successful because the balance of that data was not economically strong enough to do much damage to the recent winning streak.
In other words, rates have fallen significantly from their decades-high ceiling in October due to softer economic data and we have yet to see an economic report that argues against that softening in an overly convincing way. To be sure, last week’s jobs report was very good relative to historic norms, but not good enough to derail the narrative of a normalizing economy.
Jobs aside, inflation is the biggest nemesis for bonds/rates and the Consumer Price Index (CPI) is the biggest monthly revelation on the state of inflation. That’s precisely why tomorrow’s volatility potential is higher. The latest CPI will be released at 8:30am. If it’s higher than forecast, rates should rise. If it’s lower, rates should fall. If it comes in very far from forecasts, the movement could be quite abrupt.
As for today specifically, it ended up being mostly a placeholder ahead of CPI. The average mortgage lender was offering rates that were just a hair higher than Friday’s, but several lenders made friendly adjustments in the afternoon in response to improvements in the bond market.