Is It Time to Secure a Mortgage Rate Before the January Fed Gathering?

For buyers who've been hoping for more manageable mortgage rates, now might feel like a fresh opportunity. Over the past year, there has been a noteworthy decline—by more than a full percentage point on average. Although it's not a sudden drop akin to what we saw earlier in the decade, this shift still opens the door to favorable rates. Many potential homeowners may find this a convincing reason to secure these rates before they disappear.

Meanwhile, the Federal Reserve is gearing up to meet at the close of January. The Fed's decisions have greatly influenced fluctuations in mortgage rates at their last few meetings. This raises a pressing question for buyers: Is it prudent to wait until after the Fed's meeting on January 28, or should one act now to lock in a rate? Here's a closer look at why acting promptly might be a wise course of action.

Wondering if now is the time to commit to a mortgage rate? Consider these factors which might guide your decision.

Reason 1: The Return of 5% Range Rates

It's been several years since home buyers have seen mortgage rates in the 5% range. If you have solid credit and are in the market for a mortgage, these rates are worthwhile. Exploring your options today could present you with a deal that fits your financial plans seamlessly. Remember, it’s wise to compare offers from different lenders to ensure the most competitive rate.

Reason 2: Fed's Rate Cut Probability

With only a 5% chance of another rate cut by the Fed at the end of January, betting on the central bank to lower interest rates further doesn’t seem promising. Moreover, with no meetings scheduled for February and the next being in March, delaying a rate lock now could mean missing out on current favorable conditions.

Reason 3: Locking Now vs. Future Rate Changes

The mortgage process often stretches across months, and during this time, rates can fluctuate. By locking in today’s rate, you guarantee that it won’t rise any higher, offering stability and helping you budget effectively. Plus, should the rates drop before you finalize your purchase, many lenders offer a 'float down' option, though it may incur a fee. This flexibility means you could benefit from lower rates even after securing one now.

With the mortgage landscape shifting favorably for the first time in years, the allure of waiting for additional rate declines is understandable. Yet, given the present 5% average rates and the limited likelihood of further Fed cuts, locking in now may indeed be the smarter move.

Consulting with a mortgage lender could provide tailored guidance on whether a rate lock aligns with your circumstances, helping you effectively navigate this promising climate.