Will Mortgage Rates Go Down in 2024?

Key Takeaways

• Mortgage rates, like interest rates, have been sky high
• As inflation eases, mortgage rates should come down as well
• Moderate mortgage rate decreases look likely for 2024

Historically, mortgage rates have been influenced by the overall health of the economy, inflation rates, the Federal Reserve’s monetary policy, and demand for housing. Low mortgage rates tend to stimulate borrowing and home buying, while higher rates may moderate housing demand.

There are no two ways about it: Mortgage rates are high right now. But when are they likely to come down? We’ll take a look at mortgage rate predictions for 2024 below.

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The lowdown on high mortgage rates

You’re sick of hearing it and we’re sick of writing it: Inflation surged in 2022 and the Fed has consistently hiked interest rates as a result. In case you’ve forgotten, we’re all waiting to see if the Fed hikes rates again on July 26th.

Even though the Fed doesn’t control mortgage rates directly, it’s a close relationship. Mortgage rates move up and down based on different economic factors — of which inflation is one — and low inflation generally means lower mortgage rates.

Earlier this month, mortgage rates climbed to their highest rate since November, but as inflation slows, mortgage rates are following. The average rate on 30-year mortgages fell to 6.88 percent this week, down from 7.07 percent last week, according to Bankrate.

To be clear: that’s still pretty high. So where will rates go from here?

Where are mortgage rates headed in 2024?

As long as interest rates come down, which is the goal, mortgage rates should continue to come down too. Fannie Mae’s most recent housing forecast calls for the average 30-year fixed mortgage rate to hit around 6.3% at year’s end.

Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors all forecast a moderate decline in mortgage rates through the beginning of 2024.

Before you make your real estate plans, be warned: usually when mortgage rates go up, home prices fall. Right now, that isn’t the case. Many people rushed to buy and refinance during COVID when rates dipped as low as 2%.

Now, those same people are hesitant to sell and forfeit that low rate for a significantly higher one. That means less housing inventory to choose from overall.

The bottom line

Mortgage rates remain on the high end and inventory rather low for the moment, but it does look like mortgage rates will come down in 2024.

You may have to wait until 2024 for a lower mortgage rate, but you can take charge of your finances right now. Use one of Q.ai’s Foundation Kits to choose a theme and invest with one click.

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