Will mortgage rates go down in 2024? (2024)

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  • Inflation and Fed hikes have pushed mortgage rates up to a 20-year high.
  • 30-year mortgage rates are currently expected to fall to somewhere between 6.1% and 6.4% in 2024.
  • Instead of waiting for rates to drop, homebuyers should consider buying now and refinancing later to avoid increased competition next year.

Good news for borrowers: The wait for lower rates may soon be over. As inflation slows and the economy cools off, mortgage rates should start trending down at some point this year.

Because inflation has come down so much since it peaked in 2022, the Federal Reserve has indicated it's ready to consider cutting the federal funds rate this year. This would remove a lot of upward pressure off of mortgage rates.

The not-so-good news: Rates probably won't go back to the historic lows we saw in 2020 and 2021. And once rates fall, homebuyers will likely have other challenges to contend with, including increased competition and rising home prices.

It also may take longer for rates to drop than initially expected. While the Fed is poised to start lowering rates this year, it wants to be sure that inflation is nearing its target rate of 2%. Some recent data has suggested that price growth may be a bit more stubborn than we thought, which has pushed back expectations of a Fed cut.

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.

Why are mortgage rates so high?

Like other consumer rates, mortgage rates are impacted in large part by what's going on in the economy. Rates climbed in 2022 in response to rising inflation. To try to quell rising prices, the Fedstarted aggressively hiking the federal funds rate, which has also kept mortgage rates elevated.

Inflation has slowed significantly since it peaked in June 2022, when prices had risen 9.1% year over year, according to the Bureau of Labor Statistics. In February 2024, the Consumer Price Index was up 3.2% year over year.

Fed officials have said they need more inflation data before they consider cutting rates. Inflation has been somewhat sticky in recent months, not cooling as much as expected.

We could see the Fed cut rates around mid-2024. But if inflation stagnates, we might not get a cut until later in the year, which would keep mortgage rates higher for longer as well.

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:

Q1 2024Q2 2024Q3 2024Q4 2024
Mortgage Bankers Association6.8%6.6%6.3%6.1%
Fannie Mae6.7%6.7%6.6%6.4%
National Association of Realtors6.8%6.6%6.3%6.1%

The MBA's forecast suggests that 30-year mortgage rates will fall into the 6.1% to 6.8% range in 2024, and NAR's forecast is very similar, predicting that rates will remain in the 6.1% to 6.8% range. Though Fannie Mae was initially forecasting that 30-year mortgage rates would drop below 6% this year, it's since revised its predictions and now believes rates will fall to 6.4% by the end of 2024.

While there's some dispute on exactly how much rates will decrease, the general consensus is that mortgage rates will go down in 2024, and they could even end up close to 6% by the end of the year.

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 CNBC that 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?

Because mortgage rates are still so high, 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.

At the moment, the vast majority of borrowers have rates that are much lower than current rates. According to a Redfin analysis of Federal Housing Finance Agency data, 89% of homeowners have a mortgage rate below 6%. Many have rates that are even lower; 59.4% have a rate below 4%.

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.

Afifa Saburi, capital markets analyst for Veterans United Home Loans, says 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.

Mortgage rates in 2024: FAQs

What will the mortgage interest rate be in 2024?

Mortgage rates are likely to trend down in 2024. Depending on which forecast you look at for housing market predictions in 2024, 30-year mortgage rates could end up somewhere between 6.1% and 6.4% by the end of the year.

Are interest rates going down in 2024?

All consumer interest rates, including mortgage rates, should start to ease soon as inflation has been steadily trending down for over a year now. And once the Federal Reserve starts cutting the federal funds rate, which markets currently expect to happen in mid-2024, rates should drop more substantially.

What will the mortgage rates be in 2024 and 2025?

Mortgage rates are currently expected to continue trending down through 2024 and into 2025. The Mortgage Bankers Association thinks that 30-year mortgage rates could fall to 5.6% in 2025.

How high will mortgage rates go in 2023?

Mortgage rates for 2023 peaked in October, when 30-year rates hit 7.79%, according to Freddie Mac.

What is the mortgage rate forecast for the next 5 years?

It's hard to accurately predict where mortgage rates might go in the next five years. Mortgage rates are impacted by the economy, which is often unpredictable or volatile. Right now, it looks like mortgage rates will ease over the next two years and remain relatively steady in the years that follow.

How long will high interest rates last?

Interest rates are expected to trend down in the coming months and years. Borrowers could see lower rates as soon as mid-2024.

Molly Grace

Mortgage Reporter

Molly Grace is a reporter at Business Insider. She covers mortgage rates, refinance rates, mortgage lender reviews, and homebuying for Personal Finance Insider.Before joining the Insider team, Molly was a blog writer for Rocket Companies, where she wrote educational articles about mortgages, homebuying, and homeownership.You can reach Molly at mgrace@businessinsider.com, or on Twitter @mollythegrace.

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Will mortgage rates go down in 2024? (2024)

FAQs

Are mortgage rates expected to go down in 2024? ›

The 30-year fixed mortgage rate is expected to fall to the mid-6% range through the end of 2024, potentially dipping into high-5% territory by the end of 2025.

What is the Fed rate forecast for 2024? ›

Table 1
U.S. rates forecasts
Level %--Quarterly average--
Q1 2024Q4 2024f
Fed funds rate5.335.26
10-yearr Treasury yield4.164.03
3 more rows
4 days ago

How high could mortgage rates go by 2025? ›

The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.

What will mortgage rates be end of 2025? ›

But our forecast that Bank Rate will be cut faster than most expect, to 3.00% by the end of 2025, suggests that further reductions in mortgage rates lie ahead. We think the average mortgage rate will drop from close to 5% now to 3.5% by end-2025.

Will 2024 be a better time to buy a house? ›

Yes. This is the best time to buy a house in California. With the current trend in the CA housing market, you'll find better deals on your dream home during Q2 2024. As per Fannie Mae, mortgage rates may drop more in Q2 of 2024 due to economic changes, inflation, and central bank policy adjustments.

Will mortgage rates ever be 3% again? ›

Lawrence Yun, chief economist at the National Association of Realtors, even told CNBC that he doesn't think mortgage rates will reach the 3% range again in his lifetime.

Will the repo rate decrease in 2024? ›

In early 2024, experts were predicting that SARB would begin to lower interest rates later in the year, perhaps even as early as May 2024. Reserve Bank governor Lesetja Kganyago has made it clear interest rates will not be lowered until inflation begins to drop.

What will Fed interest rate be in 2026? ›

The median estimate for the fed-funds rate target range at the end of 2025 moved to 3.75% to 4%, from 3.5% to 3.75% in December. For the end of 2026, the median dot now shows a target range of 3% to 3.25%, versus 2.75% to 3% three months ago.

Will interest rates go down in 2024 for cars? ›

But after two years of increases, there are strong indications that auto loan rates could start to come back down in 2024 — perhaps by a substantial amount.

Will mortgage rates drop in the next 5 years? ›

“Mortgage rates will be at least a full 2% lower by 2025.” She adds that if the inflation rate holds at 2%, then we should see mortgage rates remain at lower levels for the balance of the next five years.

Do mortgage rates go down in a recession? ›

For people looking to buy a home, a recession can bring some advantages. When the economy is not doing well, home prices often drop, which can be good news for those who want to find a good deal; plus, during recessions, mortgage rates usually stay low, meaning buyers can get a home with lower monthly payments.

How low will mortgage rates go in 2026? ›

The 10-year treasury constant maturity rate in the U.S. is forecast to decline by 0.8 percent by 2026, while the 30-year fixed mortgage rate is expected to fall by 1.6 percent. From seven percent in the third quarter of 2023, the average 30-year mortgage rate is projected to reach 5.4 percent in 2026.

Will my mortgage go up in 2024? ›

The mortgage rate forecast for 2024 is that rates are expected to go down, based on current predictions, although it may take longer than had previously been hoped. And there may be fluctuations as we've seen in February and March 2024 when fixed mortgage rates increased after many months of falling.

Will personal loan rates go down in 2024? ›

When will interest rates go down? The Federal Reserve has indicated that there's a good chance it would cut rates later in 2024.

Should I go on a tracker mortgage? ›

A tracker mortgage offers you an interest rate that can go down or up, but which is generally lower than a standard variable rate (SVR) mortgage. If rates are low, or likely to fall in the near future, a tracker mortgage may be attractive. However, if rates rise, you'll pay more each month.

Will mortgage rates go down in 2026? ›

The 10-year treasury constant maturity rate in the U.S. is forecast to decline by 0.8 percent by 2026, while the 30-year fixed mortgage rate is expected to fall by 1.6 percent. From seven percent in the third quarter of 2023, the average 30-year mortgage rate is projected to reach 5.4 percent in 2026.

Will savings interest rates go down in 2024? ›

According to the Summary of Economic Projections, the Fed may implement at least three 25-basis point interest rate cuts in 2024—bringing the federal funds rate closer to 4.60%.

What are CD rates expected to do in 2024? ›

While the federal funds rate climbed steadily in 2022 and 2023, rates have flattened and are expected to fall at some point this year. The CME FedWatch Tool, which measures market expectations for federal funds rate changes, shows that most experts expect rates to sit between 4.50% and 5.25% by December 2024.

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