This week brought a slight dip in mortgage rates, with the 30-year fixed mortgage hitting 5.990%, down from the previous week. In a speech on August 26, Mary Daly, president of the Federal Reserve Bank of San Francisco, aligned her views with those of Fed Chair Jerome Powell, stating that “it’s time to adjust policies.” Her comments intensified market speculation that the Federal Reserve might consider lowering interest rates as soon as September.
Jerome Powell has recently indicated that the Fed is poised to begin a rate-cutting cycle in response to a cooling labor market, potentially starting in September 2024. His statements reflect the Fed’s increasing confidence in tackling inflationary pressures related to employment. He noted, “At this time, it seems unlikely that the labor market will create inflationary pressures in the near term. The moment for policy adjustments has come, and the path ahead is becoming clearer. The timing and pace of any rate cuts will be guided by upcoming data.”
Looking to the future, many analysts expect a gradual decrease in mortgage rates. Experts believe the magnitude of this decline will largely hinge on how the labor market performs. If the labor market cools more than anticipated, resulting in a significant increase in unemployment, both short- and long-term rates might drop more quickly than expected. On the flip side, if the labor market tightens again, any potential rate cuts may not meet current market expectations.
