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Money Market Interest going down?
Posted on 12/5/23 at 10:58 am
Posted on 12/5/23 at 10:58 am
My banker let me know that 5% will be going away in 2024. They expect down to less than 4% by the end of 2025. You bank experts hearing anything? I would assume mortgage rates would go down also?
This post was edited on 12/5/23 at 10:59 am
6
Posted on 12/5/23 at 11:10 am to XenScott
Not an expert, but some people are predicting the fed lowers interest rates in their March meeting. Rates for MMA, HYSA, CDs, T-Bills, etc would follow suit.
But we shall see.
But we shall see.
Posted on 12/5/23 at 11:22 am to XenScott
quote:
My banker let me know that 5% will be going away in 2024. They expect down to less than 4% by the end of 2025. You bank experts hearing anything? I would assume mortgage rates would go down also?
A few things here:
1) bank “money market” accounts and “money market mutual funds” are two different things. The bank sets their own money market rate to whatever they’d like whenever they want to change it. A money market mutual fund is market driven, so until 90ish day rates start to pull back, you’re still going to get 5-5.3ish on those options.
2) there is a market expectation that rates will be going down. 6m treasuries are around 5.4%, while 12m treasuries are around 5.08%. That implies a couple rate cuts in that 6-12m window.
3) short term rates that the Fed controls and long term rates like mortgages are not very correlated. They may move in the same general direction during cycles, but the velocity of the movements and when they change aren’t very predictable. I believe longer term rates will be a bit stickier from here. I could see 10y treasuries getting back to 3.5 or so, but anything much more than that would be a bit surprising in the next 12-18m. Keep in mind the yield curve is still inverted - you’re getting more interest to stay short than you are to go long. It can revert back to “normal” without long term rates having to fall.
Posted on 12/5/23 at 12:09 pm to XenScott
There is a lot of chatter about rate cuts in 2024 starting in March. Which means yes, mortgage rates should dip but so will interest on high yield savings vehicles.
Posted on 12/6/23 at 10:42 am to Suntiger
All for dropping my HELOC rate at the expense of whatever im getting in my bank money market account.
Posted on 12/6/23 at 11:28 am to Thundercles
quote:
There is a lot of chatter about rate cuts in 2024 starting in March.
I doubt it. The Feds are still on the fence about still raising rates during the next meeting. Probably won't see any cutting until later next year.
Posted on 12/8/23 at 9:58 am to XenScott
I work for a big bank, we had our annual meeting for the mortgage department last month. They are predicting rate cuts starting in march and continuing after that. Rates on mortgages have took a .5% dip in the last month. The bank has also cut the rates on all deposit accounts and CD's/money market accounts. rate cuts are coming, my bank has always been ahead of the FED most banks are.
Posted on 12/8/23 at 10:49 am to XenScott
The Federal Reserve and US Central Bank rates are generally what everything evolves around. Your banker is alluding to that rate likely decreasing. They have enough interest thrown around that the market drives everyone else to stay around there, some rates are generally better then them and some are generally worse.
Posted on 12/9/23 at 1:29 pm to XenScott
Your banker is really just telling you what's been happening with treasuries in the past few months. No epiphany here. Most MM rates have already started crossing below 5%. There is a common belief of a ~1% fed cut over the next 12 months. This is a good prediction site. CME FedWatch Tool
Posted on 12/9/23 at 3:18 pm to baldona
quote:Aren't those the same thing?
The Federal Reserve and US Central Bank rates
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