Morning! This is MF Lending - the fool-proof way to serve up mortgage and real estate market knowledge without any of the guesswork. So you’ll look like the smartest agent in the room (and you are!)

Here’s what we’ve got for you today:

1. Market Reactions, Dot Plot, and what it means for 2024 📝

2. How this drop affects payments - @mf.lending🎥

By the way, this article on Rate Cut Predictions is the most clicked link in this newsletter, you should check it out if you are interested.

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Rates Today 📉

After the meeting yesterday, rates fell to the lowest levels since May 2023.

Fed Meeting: Market Reactions, Dot Plot, and what it means for 2024 📝

The Fed kept rates unchanged in the meeting yesterday.

The much anticipated “Dot Plot” was released in this meeting as well, a chart completed by Fed members charting their interest rate predictions for the following three years.

The results can tell us this: we are done cutting rates. Rates will be cut next year about 75bps (this would be three 25bp rate cuts).

These rates may also come faster than we thought previously -

In a tweet from - Greg Michalowski:

“In the December report:

• For 2024: the median fed funds target rate is now 4.6% vs 5.1% in June - down -0.50%

• For 2025: the median fed funds target rate is now 3.6% vs 3.9% in June - down -0.30%

• For 2026, the median fed funds target rate is now 2.9% vs 2.9% in June - unchanged.”

If these projections are correct, that would mean rates could be in the high to mid-5% range by the end of 2024.

What does this mean for mortgage rates & buyers?

Mortgage companies and investors tend to bake these rate cuts into the market faster than the Fed implements them (as we saw today with a 75bp improvement in the bond market 🤯)

In the short term: rates will improve for prospective borrowers. In the last 24 hours alone, rates have improved nearly .5%. I expect those savings to settle in the market.

Ultimately, we should see rates around 6.5% - 6.75% for the remainder of the year.

In the long term: you will see a slow decline in mortgage rates. Some market experts are predicting the first cut as early as March. That could mean we see rates fall under 6% by summer 2024.

What can you be doing?

1. Call your database with the good news -

   1. Recent data shows that homeowner’s who have owned their home longer than 3 years are more likely to sell and purchase a new home than refinance their current home. The built-up demand is there.

2. Encourage your preapproved buyers to move on something now -

   1. We are about to see a massive wave of buyers into the market. For the majority of early 2023, there was (what felt like) an arbitrary ceiling for buyers above 6.5% when they decided to opt-out of buying. In a matter of 24 hours, we fell back below that ceiling.

   2. Sellers in the market right now have, most likely, been listing for a few weeks. They may feel the anxiety or pressure to get something under contract. Right now, in the next month, may be the last time we see massive seller concessions on contracts. As more buyers enter the market, the leverage will quickly swing back to the sellers.

In short, the window to get an incredible deal is shrinking very quickly. But, we also have the light at the end of the tunnel. We are now past the highest level of mortgage rates and on our descent.

How this drop affects payments - @mf.lending🎥

I posted this instagram post today - detailing how the Fed meeting affected interest rates in just 24 hours. Mind-blowing how quickly it plummeted.

An unbelievable turnaround for buyers in this market. This is literally hundreds of dollars per month in a 24 hour span. Very exciting.

The Cul-de-Sac

Thanks for reading - that is all we have for today 😎

Please forward this to your friends and colleagues if you found it valuable.

— Michael F DiLucchio