Good News for Borrowers - 2024 Mortgage Rate Decline!

Good news for borrowers: The wait for lower rates may soon be over. Mortgage rates have dropped quite a bit in recent months, and they’re likely to continue trending down in 2024.

The latest economic data, including November’s Consumer Price Index report, show that inflation is slowing and the economy is cooling. The Federal Reserve seems pleased with these developments, and has indicated it’s ready to consider cutting the federal funds rate next year. All of this will remove a lot of upward pressure off of mortgage rates.

Will mortgage rates go down in 2024? Right now, it’s looking like they will, but there are some things homeowners and buyers should know. Check out our in-depth mortgage rate forecast for 2024.

Mortgage rate predictions 2024

Most major forecasts expect rates to fall in 2024. But exactly when will mortgage rates go down? Here’s how a few of the leading players stack up in their predictions:

Fannie Mae’s forecast suggests that 30-year mortgage rates will fall into the 6.1% to 7% range in 2024, while NAR believes rates will fall a bit further, ending up in the 6.3% to 7.5% range. The MBA forecast predicts that 30-year mortgage rates will drop to 6.1% by the end of 2024.

When will mortgage rates go down to 3%? It’s possible that rates will one day go back down to 3%, though if current trends hold that’s not likely to happen anytime soon.

Think about the reason why rates went so low in the first place: In response to the COVID-19 pandemic, the Fed cut the federal funds rate to near zero and purchased a large number of mortgage-backed securities to stave off an economic crisis. This allowed mortgage rates to drop as low as they did, with 30-year mortgage rates reaching an all-time low of 2.65% in January 2021, according to Freddie Mac.

No one can predict exactly when another economy-altering event like the pandemic will occur, but barring something extreme, we likely won’t see rates that low again for a while. Lawrence Yun, chief economist at the National Association of Realtors, even told CNBCthat he doesn’t think mortgage rates will reach the 3% range again in his lifetime.

Should I wait for mortgage rates to drop before buying a house?

With mortgage rates at the highest level they’ve been in over 20 years, some hopeful homebuyers have decided to wait for lower rates to start shopping for homes. But that’s not necessarily the best strategy, as there are some advantages to buying right now.

High rates have kept many of these homeowners from selling, since they don’t want to give up their current rates. While this has severely limited inventory, the lack of additional buyers on the market has also kept prices moderate.

“While buyers may have a lower rate in 2024, there will be more buyer competition next year, which will drive prices higher,” . . . “Buyers should grab a deal now at a lower price and refinance next year if rates do fall.”

Afifa Saburi, capital markets analyst for Veterans United Home Loans, agrees that buying now and refinancing later is a good strategy for buyers who want to avoid competition and the higher home prices that will likely come with it.

“Would-be buyers that have the ability to buy can avoid a potentially competitive market by locking in a purchase now and taking advantage of a refinance in the future,” says Saburi.

A mortgage refinance replaces your existing mortgage with a new mortgage, often with the goal of getting a lower rate or lower monthly payment. If you can afford to buy a house now, you could avoid a tough housing market next year and have the opportunity to lower your housing costs with a refinance once rates fall. Just be sure to shop around and get quotes from multiple mortgage refinance lenders to be sure you’re getting the best rate.