2023 Market Recap

A New Tone for the New Year?

You did it! You made it through a crazy year in the mortgage origination market, where we saw 30-year mortgage rates rise above 8%, then rapidly decline to fall back to 6.67% by the end of 2023. Let’s quickly recap the movement we witnessed last year.

To start, mortgage rates were sitting at 6.54% in early January. As the year progressed, we observed a year-low of 6.17% in April, which slowly increased to a high of 8.03% in mid-October. As we approached year end with inflation cooling dramatically from its peak in 2022, the Federal Reserve’s (Fed) aggressive tightening campaign stopped. The conversation quickly moved from “rates higher for longer” to “when will the Fed pivot to lowering rates.” This had a dramatic impact on longer term US treasury bonds, and the bond rally was on as 30-year mortgage rates followed, moving lower to close out the year at 6.67%.

There are mixed opinions on the Fed’s tactics throughout last year, but the markets are suggesting that the Fed will start to cut rates in 2024. The real question is when? Looking back, the campaign proved to be successful, as the Consumer Price Index (CPI) has fallen to 3.4% from a peak of 9.1% back in June 2022. Alongside that, job growth has also fallen to just 235,000 per month. What the Fed decides to do early on will ultimately set the tone for the new year in 2024.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All loans are subject to loan guidelines and approval.