After aggressively raising rates over the past year in an effort to tame inflation, the Fed is now shifting to a “wait and see” approach. They want to assess how the cumulative rate hikes since March are impacting the economy before making any further moves.
For San Francisco homebuyers and sellers, this pause brings some much-needed stability to mortgage rates after nearly a year of steady increases. Rates on 30-year fixed mortgages surpassed 7% in October but have since retreated slightly to around 6.5%. While still high historically, this leveling out is welcome news.
With the Fed standing pat for now, mortgage rates likely won’t see any further major jumps in the near future. For now, this gives buyers a chance to lock in rates before any future hikes. For sellers, steady rates signal that the market may be stabilizing after the frenzy of 2021.
However, the pause doesn’t mean rates will start dropping dramatically anytime soon. The Fed indicated they will continue closely monitoring inflation and won’t rule out further small increases if prices remain stubbornly high.
Overall, the Fed’s announcement brings cautious optimism that the rapid run-up in rates over the past year is slowing down. For San Francisco real estate, it provides a much-needed opportunity for buyers and sellers to adjust to the new higher-rate environment. While the market likely won’t return to the ultra-low rates of 2021 for some time, a period of stability would be welcomed.
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