The Fed Might Be Done Raising Interest Rates

Are you a St. Louis homeowner actively seeking favorable interest rates for your Home Equity Line of Credit (HELOC)? If so, there’s promising news on the horizon. Starting as early as next summer, your HELOC might become more cost-effective, presenting a prime opportunity for you to save on borrowing costs.

In the coming 6-12 months, St. Louis homeowners can anticipate a shift in HELOC interest rates that may work in their favor. As we delve into the details, you’ll discover why this change is on the horizon and how it could translate into potential savings for those in the St. Louis housing market.

The Odds of Another Fed Rate Hike Are Now Lower Than a Fed Rate Cut

While the financial markets are dynamic and always subject to change, data is now signaling that the Fed rate hikes are done. And even better, that a rate cut is on the horizon in early 2024. The CME FedWatch Tool, which tracks the likelihood that the Fed will change its target rate at upcoming FOMC meetings, no longer has additional rate hikes as odds-on favorites. Instead, it has a rate cut as the most probable next move, slated for the June 2024 Fed meeting.

In the meantime, rates are largely expected to remain unchanged, though a rate cut could arrive even sooner. These percentage probabilities are based on interest rate trades by major brokers in the market for overnight unsecured loans between depository institutions. As noted, the forecasts are subject to change (and do change constantly), but the data appears to be tipping more and more in favor of rate cuts instead of hikes. In the chart above, you can see that rates are expected to be unchanged during the next five Fed meetings (light blue boxes).

But in June 2024, the odds are now on a 0.25% rate cut, with a 38.7% likelihood, versus them holding steady at 24.5%. Interestingly, even a .50% rate cut has higher odds at 24.8%, meaning the odds of a cut are pretty strong by then. Depending on how things pan out, a rate cut could come even sooner, with a 0.25% cut holding odds of 38.5% in May vs. holding steady at 38.9%.

If we look at total probabilities, there’s a better chance of rates easing vs. hiking by the March 2024 meeting. And it continues to get rosier and rosier for interest rate cuts through the end of 2024.

Understanding the Dynamics: What’s Driving the Anticipated Change?

Several factors contribute to the expected shift in HELOC interest rates. Economic indicators, market trends, and financial policies all play a role in shaping the borrowing landscape. St. Louis homeowners stand to benefit from this evolving financial climate, with potential cost reductions on their HELOCs.

The Timing: May 2024 Marks the Potential Turning Point

If you’re considering a HELOC or currently have one, mark May 2024 on your calendar. Industry experts predict that this could be the turning point when St. Louis homeowners start experiencing more favorable interest rates on their HELOCs. This timing aligns with broader economic forecasts and adjustments in financial markets.

Why You Should Pay Attention: Potential Cost Savings

As a St. Louis homeowner, keeping a close eye on these market dynamics could lead to substantial cost savings. Lower interest rates mean reduced borrowing costs, making HELOCs more financially attractive for home improvement projects, debt consolidation, or other financial goals.

Take Advantage of the Shift: What St. Louis Homeowners Can Do

Stay informed and be proactive. Keep abreast of financial news, market trends, and updates on interest rate changes. If you’re in the market for a HELOC or currently have one, consider consulting with financial experts to explore how these potential rate adjustments could benefit your specific situation.

In Conclusion: Optimism for St. Louis Homeowners

The landscape for St. Louis HELOC interest rates is poised to change, and the forecast indicates a positive outlook. By staying informed and leveraging these potential savings, St. Louis homeowners can take advantage of a more cost-effective borrowing environment. As May 2024 approaches, keep a watchful eye on the evolving financial landscape to make informed decisions regarding your Home Equity Line of Credit.

Written by: Carlson Mortgage – a top-rated St. Louis mortgage broker providing home loans in the state of Missouri. We are routinely ranked as a #1 mortgage broker in Missouri on Yelp, Google and Zillow. We can be reached at (314) 329-7314 seven days a week.

Our loan application can be found here or you can call us at 314-329-7314 to speak with one of our mortgage loan officers. Also, here is our pre-approval page, if you are looking to buy a home or need a referral to a top real estate agent.

Let us be your source for some of the lowest mortgage interest rates in St. Louis on first-time home buyer, conventional, FHA, Veterans (VA), Jumbo and condominium (condo/town home) financing. Since 2004, our loan officers have been providing home loans and mortgage services in St. Louis that are tailored individually to your unique needs and to your financial situation.  Call us today to inquire about home loan interest rates, to get pre-approved for a purchase or a refinance mortgage, or if you have any general mortgage lending questions.