When will mortgage interest rates move lower? The FED has continued to hammer the housing market by raising interest rates while trying to get inflation under control. This has caused the 2022 housing market to stall and affordability to become a huge problem. Will this slow down cause a housing crash? In this video, we discuss what's happening with mortgage rates, inflation, the possibility of a recession and what would cause interest rates to move lower.
While I was wrong about my interest rates predictions, I do believe there are a handful of things that could cause the fed to pivot and allow interest rates to move lower. As we know, interest rates tend to follow inflation. If inflation continues to go up, interest rates will likely follow. If inflation moves lower, interest rates should move down.
The first one is rising unemployment. One of the measures the FED uses to gauge how well the economy is doing is employment. If unemployment starts to rise then the FED will have to reconsider their actions in turn allowing interest rates to potentially move lower.
The second item is if inflation moves lower than expected. This will show that what the FED is doing is actually working and that could cause the FED to pause in the short term allowing volatility to subside and this could allow rates to move lower.
The third one is if the economy goes into a recession. Recessions are deflationary by nature but that also means that the growth in the economy is stalling and would give the fed a reason to adjust their plan. A recession could also give the FED a reason to do some Quantitative Easing by lowering the fed funds rate and in allowing interest rates to move lower.
