The Federal Reserve on Wednesday cut interest rates for the third time in 2024. Despite the move, mortgage rates increased.

The 30-year fixed rate mortgage spiked to 6.72% for the week ending Dec. 19, a day after the Fed meeting, according to Freddie Mac data via the Fed. That’s up from 6.60% from a week prior.

At an intraday level, the 30-year fixed rate mortgage increased to 7.13% on Wednesday, up from 6.92% the day before, per Mortgage News Daily. It notched up to 7.14% on Thursday.

The dot plot, which indicates individual members’ expectations for rates, showed officials see their benchmark lending rate falling to 3.9% by the end of 2025, equal to target range of 3.75% to 4%. After the latest rate cut, it’s currently at 4.25%-4.5%.

When the Fed made its first rate cut in September, it had projected four quarter-point cuts, or a full percentage point reduction, for 2025.

“That, in conjunction with Trump’s desired policies on tariffs, immigration and tax cuts — which are all inflationary — spooked the bond market,” Cohn said.

Mortgage rates also tend to move in anticipation of what the Fed is going to do in its upcoming meetings, said Jacob Channel, a senior economist at LendingTree.

For instance, mortgage rates declined this summer and early fall, in anticipation of the first interest rate cut since March 2020.

Therefore, mortgage rates might not do “anything particularly dramatic” in the face of the Fed’s actual meeting, he said. 

As Congress scrambles to avoid a government shutdown, the Senate is also poised to consider another bill that would increase Social Security benefits for some public workers.

But the bill, the Social Security Fairness Act, may undergo changes if some Senators’ efforts to add amendments are successful.

Per the original proposal, the Social Security Fairness Act calls for eliminating Social Security provisions known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO, that have been in place for decades.

The WEP reduces Social Security benefits for individuals who receive pension or disability benefits from employment where they did not pay Social Security payroll taxes. The GPO reduces Social Security for spouses, widows and widowers who also receive their own government pension income. Together, the provisions affect an estimated 3 million individuals.

The bill has enthusiastic support from organizations representing teachers, firefighters, police and other government workers who are affected by the benefit reductions.

“You shouldn’t penalize people for income outside of a system when you’ve paid into it and earn that benefit,” said John Hatton, vice president of policy and programs at the National Active and Retired Federal Employees Association. “It’s been 40 years trying to get this repealed.”

The bill has received overwhelming bipartisan support. The Social Security Fairness Act was passed by the House with a 327 majority in November.

Preliminary Senate votes this week have also shown a strong bipartisan support for moving the proposal forward. On Wednesday, the chamber voted with a 73 majority on a cloture for the motion to proceed. That was followed by a Thursday vote on a motion to proceed that also drew a 73-vote majority.

Experts say the Senate may soon hold a final vote. It could proceed in one of two ways — with amendments that alter the terms of the original bill or with a final vote without any changes.

The Social Security Fairness Act would cost an estimated $196 billion over 10 years, according to the Congressional Budget Office.

Those additional costs come as the trust funds Social Security relies on to help pay benefits already face looming depletion dates. Social Security’s trustees have projected the program’s trust fund used to pay retirement benefits may be depleted in nine years, when just 79% of benefits may be payable.

Some senators who oppose the Social Security Fairness Act have expressed concerns about the pressures the additional costs would put on the program.

Sen. Rand Paul, R-Kentucky, who this week voted against moving the current version of the bill forward in the Senate, said this week he plans to propose an amendment to offset those costs by gradually raising the retirement age to 70 while also adjusting for life expectancy. Social Security’s full retirement age — when beneficiaries receive 100% of the benefits they’ve earned — is currently age 67 for individuals born in 1960 or later.

“It is absurd to entertain a proposal that would make Social Security both less fair and financially weaker,” Paul said in a statement. “To undo the damage made by this legislation, my amendment to gradually raise the retirement age to reflect current life expectancies will strengthen Social Security by providing almost $400 billion in savings.”

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As of Friday morning, a total of six amendments to the bill had been introduced, according to Emerson Sprick, associate director of economic policy at the Bipartisan Policy Center.

Some amendments call for replacing the full repeal of the WEP and GPO provisions with other changes.

One amendment from Sens. Ted Cruz, R-Texas, and Joe Manchin, I-West Virginia, would instead put in place a more proportional formula to calculate benefits for affected individuals. That change, inspired by Texas Republican Rep. Jodey Arrington’s Equal Treatment of Public Servants Act, has a lot of support from policy experts and the Bipartisan Policy Center, Sprick said.

Social Security advocacy groups have pushed for larger comprehensive Social Security reform that would use tax increases to pay for making benefits more generous.

“We want to help in making this happen, but our preference was for it to be part of a much larger Social Security reform,” said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.

To be sure, if amendments are successfully added to the bill, it would have to go back to the House.

“We’re hoping that that doesn’t come to that, because that could complicate matters, depending on the timing of how what’s going on with the [continuing resolution]” to avoid a government shutdown, Adcock said.

A few years ago, Wes Bellamy, 38, took stock of his investment accounts in preparation to buy a home in Charlottesville, Virginia. It was then that he noticed significant gains in his 401(k).

Although Bellamy, who is the chair of the political science department at Virginia State University, had been saving diligently for nearly a decade and making the most of his employer’s matching program, he said seeing his retirement account balance was “a pleasant surprise and a nice nest egg.”

Since then, his 401(k) balance has continued to grow. “I’m at $980,000 — I’m not at a million yet but I’m close.”

Saving $1 million for retirement used to be considered the gold standard, although these days financial advisors may recommend putting away even more.

Millennial workers are still the most common generation to say they’ll need at least $1 million to retire comfortably, according to a recent report by Bankrate, and, for the first time, a larger share of younger retirement savers are reaching that key savings threshold.

The number of millennials with seven-figure balances has jumped 400% from one year ago, according to the data from Fidelity Investments prepared for CNBC.

Among this group, the number of 401(k) accounts with a balance of $1 million or more rose to about 10,000 as of Sept. 30, up from around 2,000 in the third quarter of 2023, according to Fidelity, the nation’s largest provider of 401(k) plans. The financial services firm handles more than 49 million retirement accounts altogether.

Generally, reaching 401(k) millionaire status only comes after decades of consistent contributions, making it a harder milestone for younger workers to achieve.

This year, positive market conditions helped boost those account balances to new highs. The Nasdaq is up 29% year to date, as of Dec. 19, while the S&P 500 notched a 23% gain and the Dow Jones Industrial Average rose more than 12%.

“Even shorter-term savers have done well because of significant market gains,” said Mike Shamrell, Fidelity’s vice president of thought leadership.  

“If we continue to see positive market conditions, we could see not only the overall number of millionaires overall bump up over that threshold but also more millennials,” Shamrell said.

Whether savers benefit more from long-term savings efforts or a favorable investment environment, “the reality is, it’s a blend of both,” financial advisor Jordan Awoye, managing partner of Awoye Capital in New York, said.

Further, millennials — the oldest of whom will be 44 in 2025 — are nearing their peak earning years, he said, “which is making it more enticing to save for retirement.”

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Still, reaching the million-dollar mark “is not everything,” Awoye said.

Heading into a year of potential volatility, those balances will fluctuate, perhaps even dramatically. However, there is still plenty of time before millennial savers will need to access those funds in retirement. “You are likely not touching that money for 20 years. Even if [the market] goes up and down, stick to the script,” Awoye said.

“When you are retirement planning, you have to remember to tie it back to your North Star, which is your goal.”

In 2023, only 14% of employees deferred the maximum annual amount into 401(k) plans, according to Vanguard’s 2024 How America Saves report. But that’s a missed opportunity, Ransom-Cooper said.

In 2025, employees can defer $23,500 into workplace plans, up from $23,000 in 2024. (The IRA contribution limit is $7,000 for 2025, unchanged from 2024.)

At the same time, employer contributions are climbing. Together, the average 401(k) savings rate, including employee deferrals and company contributions, rose to 12.7% in 2023, up from 12.1% the year before, according to the Plan Sponsor Council of America’s annual survey of 401(k) plans.

That’s made a big difference, Ransom-Cooper said. “There’s more money that can go into these accounts outside of the employee contribution, that can be really helpful to push these accounts higher and help people reach their retirement goals.”

While there is always the chance that a market downturn will take a toll on these balances in the year to come, the markets are up more than they are down, Ransom-Cooper said. “They can weather those tougher days in the shorter term.”

“Staying the course and keeping that longer term vision is really helpful,” she said.

Bellamy says his goal is to retire in another 20 years, before reaching 60. “Then, I’ll have another 15, 20 years to live my life freely as I want to.”

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