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Fed Pivot, Rate Drops, Colorado Boom: Your 2024 Guide to a Winning Mortgage Strategy

Writer's picture: Nick BartaNick Barta

2024 is ushering in transformative changes in the mortgage industry, driven by broader economic shifts and Federal Reserve policies. For Colorado’s homebuyers and homeowners, grasping these changes is key to making savvy real estate decisions.


Woman receiving the keys to her new home.


Economic Overview

The inflation rate, a crucial economic indicator, showed a significant decline from its peak in mid-2022. Key statistics include:


  • Consumer Inflation (CPI): Reduced to +3.1% year-over-year in November.

  • Business Inflation (PPI): Fell to 0.9% year-over-year in the same period.


These figures indicate a stabilizing economy, impacting the real estate sector, particularly in dynamic markets like Colorado.


Federal Reserve's Strategic Pivot

The Federal Reserve has recently switched gears, holding short-term interest rates steady. This move, along with the anticipated rate cuts of 50 to 100 basis points by the end of 2024, has significantly shifted market dynamics.


Mortgage Rate Dynamics

In anticipation of the Fed's policy shift, the average 30-year mortgage rate has dipped to 6.6%, a notable decline of almost 1.5% in a mere two months. This trend impacts Colorado's real estate market by driving demand and raising questions about supply adequacy.


2024 Strategy for Colorado Residents

With the Fed's new projections and potential rate cuts, it’s wise for Colorado residents to strategically plan their real estate moves. Remember, mortgage rates typically adjust before Fed actions, so proactive planning is beneficial.


Buyer and Homeowner Options

  • Hybrid ARM: Lowers initial costs with a reduced rate that later aligns with market rates. Ideal for those expecting short-term homeownership.

  • Fixed Rate Buydowns: Eases initial payments, suitable for buyers expecting future income growth.

  • HELOCs: Offers flexible access to equity, best for those with significant equity and needing funds for specific purposes.


Understanding the Federal Reserve's Influence:

The Federal Reserve plays a critical role in shaping mortgage costs through its control of the federal funds rate and the discount rate. A grasp of these policies is essential for navigating the current environment:


  • Federal Funds Rate: This is the interest rate banks charge each other for overnight loans. When the Fed raises this rate, mortgage rates typically follow suit.

  • Discount Rate: This is the interest rate the Fed charges banks for borrowing directly from them. Similar to the federal funds rate, adjustments here can influence mortgage rates.


By understanding these levers of the financial system, you can make informed decisions in a dynamic market.


Embrace the Opportunities:

2024 presents exciting possibilities in the Colorado mortgage market. By equipping yourself with the right knowledge and strategies, you can capitalize on this dynamic environment and unlock your real estate dreams in the heart of the Rockies.


Exclusive Offer: Dive deeper into how these trends affect you with a complimentary consultation. Our experts are ready to explore your options and chart your path in Colorado’s real estate scene.

Comments


*No down payment loans: Closing costs and fees may still apply. First lien interest rates may be higher when using a DPA second. Opinions expressed are solely my own and do not express the views of my employer. Pre-approvals are given to clients who have met qualifying approval criteria, for specific loan requirements, and have been pre-approved by a PRMI underwriter. VA home loan purchases, have options for 0% down payment, No private mortgage Insurance requirements, competitive interest rates, with specific qualification requirements. VA Interest rate reduction loans (IRRRL) are only for Veterans who currently have a VA loan, current loan rate restrictions apply, and limits to recoupment of costs and fees apply. VA Cash-out Refinances are available for Veterans with or without current VA loans. Policies and guidelines may vary and are subject to the individual borrower(s) qualification. Program and Lender overlays apply.

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Nick Barta

Division President | Loan Originator

NMLS/MA MLO #25540 | AZ MLO #0927129

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Nick Barta is authorized to do business in the states of Arizona, Colorado, Florida, Massachusetts, Texas, Utah, and Wyoming. 
 

AZ License #0927129 | CO License #100017626 | FL License #LO3538 | MA License #MLO25540 | UT License #12270993 | WY License #106077 

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Security First Financial is a division of Primary Residential Mortgage, Inc. PRMI NMLS 3094. Branch NMLS ID# 385589. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. CO – Regulated by the Division of Real Estate, UCCC #987701-016. AZ – Arizona Department of Financial Institutions 0902614. MA – Licensed by the Massachusetts Division of Banks as a Broker and Lender as #MC3094. FL - Florida Office of Financial Regulation MLD646. TX - This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas. UT - Utah Division of Real Estate #5489480. WY - Wyoming Division of Banking 399.

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Consumers wishing to file a complaint against a mortgage banker or licensed mortgage banker residential loan originator should complete and send a complaint form to the TX department of savings and mortgage lending, 2601 North Lamar Suite 201, Austin, Texas 78705. Complaint forms and instructions may be obtained from the department’s website at www.sml.texas.gov. A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed mortgage banker residential mortgage loan originators. A written application for reimbursement from the recovery find must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at www.sml.texas.gov.

 

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