Will Interest Rates Go Down in October? | Predictions 2024

Mortgage rate forecast for next week (Sept. 23-27)

Mortgage interest rates dropped to their lowest level since February 2023 following yesterday’s big Fed news.

The average 30-year fixed rate mortgage (FRM) fell from 6.2% on Sept. 12 to 6.09% on Sept. 19, according to Freddie Mac.

“While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market. Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity,” said Sam Khater, chief economist at Freddie Mac.

In this article (Skip to...)

• Will rates go down in October?
• 90-day forecast
• Expert rate predictions
• Mortgage rate trends
• Rates by loan type
• Mortgage strategies for October
• Mortgage rates FAQ

Will mortgage rates go down in October?

“October mortgage rates could continue the downward trend we have seen in recent weeks as the financial markets continue to price in the Fed rate cuts and weakening of labor markets”

-Selma Hepp, chief economist at CoreLogic

Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% on Feb. 2 and as high as 7.79% on Oct. 26, according to Freddie Mac. It’s been much tamer in 2024, as rates gradually descended in the second half of the year.

With the economy possibly heading into a recession, we may have already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.

Experts from CoreLogic, First American, Realtor.com and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in October.

Expert mortgage rate predictions for October

Nick Boniakowski, head of agent partnerships at Opendoor

Prediction: Rates will decline

“With rising unemployment and inflation stabilizing, the Federal Reserve will likely cut mortgage rates. This significant move would lower the federal funds target rate, or the rate that banks charge each other when lending money overnight. This target rate is a reference point for other interest rates — like for credit cards and cars — and the lower it is, the more affordable it is for people to borrow and spend. The intention behind a rate cut is typically to stimulate the economy and employment without fueling inflation, which can deeply affect the finances of American citizens.”

Jay Crowell, division president at Cornerstone Home Lending

Prediction: Rates will decline

“I think they’ll improve slightly. I think we’ll see some moderate improvement this fall. The market’s pricing in a full point improvement from the Fed at three meetings. We would need some bigger news for bigger movements. They still want that softer landing and probably want to get through the cycle of the election, but we should see rates decline as we keep going. Like we’ve seen over the summer, there’s always a few steps forward and a few steps back along the way.”

Mark Fleming, chief economist at First American

Prediction: Rates will decline

“The main reason mortgages are expected to gradually decline is the highly anticipated Federal Reserve rate cut expected in September. In fact, the expectation of the federal funds rate cut has already put downward pressure on mortgage rates. Once the Federal Reserve begins easing the federal funds rate, mortgage rates could fall further.

Additionally, the spread between the 10-year Treasury yield and 30-year, fixed mortgage rate remains significantly wider than usual. There’s room for this spread to narrow, though it’s unlikely to return to historical norms. If the spread narrows, then mortgage rates could come down, even if the benchmark 10-Year Treasury remains unchanged. Overall, any decline in mortgage rates is expected to be a gradual downward drift.”

Danielle Hale, chief economist at Realtor.com

Prediction: Rates will decline

“I expect that the general trend for mortgage rates toward the end of the calendar year will be lower, but there could be some setbacks. Inflation and labor market data will continue to be the biggest drivers. The lower the inflation and unemployment readings, the faster I expect mortgage rates will decline, and the reverse is true as well. The upcoming elections are a bit of a wild card, and shifts in the electoral polls could cause some gyrations in financial markets, but I don’t expect this to be the biggest driver.”

Selma Hepp, chief economist at CoreLogic

Prediction: Rates will moderate

“October mortgage rates could continue the downward trend we have seen in recent weeks as the financial markets continue to price in the Fed rate cuts and weakening of labor markets. Nevertheless, with most of the initial rate cut already priced in at this point, it’s unlikely that the decline will be noticeably larger. Barring any surprises with the U.S. economy, we still expect mortgage rates to remain above 6% through the year end.”

Preetam Purohit, head of hedging and analytics at Embrace Home Loans

Prediction: Rates will moderate

“We think mortgage rates will continue to move sideways unless the economic releases are dovish. The latest employment data came in mixed. We do expect the economy to slow down from current levels and employment conditions to worsen for the mortgage rates to go down lower by the end of the year. The Treasury mortgage spread has room to move another 25 basis points from here and so does the Treasuries. We expect mortgage rates to end the year between 5.75% and 6%.”

Mortgage interest rates forecast next 90 days

As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to the average 30-year fixed-rate mortgage spiking in 2023.

With inflation gradually cooling, the Fed adjusted its policies with skipped hikes and cuts are expected this year. Additionally, the economy showing signs of slowing has many experts believing mortgage interest rates will gradually descend in 2024.

Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.

Mortgage rate predictions for 2024

The 30-year fixed-rate mortgage averaged 6.09% as of Sept. 19, according to Freddie Mac. All five major housing authorities we looked at project 2024’s third quarter average to finish above that.

Wells Fargo sits at the low end of the group, predicting the average 30-year fixed interest rate to settle at 6.3% for Q3. Meanwhile, the National Association of Realtors had the highest forecast of 6.9%.

Current mortgage interest rate trends

Mortgage rates sit at their lowest level since February 2023.

The average 30-year fixed rate dropped from 6.2% Sept. 12 to 6.09% on Sept. 19. The average 15-year fixed mortgage rate similarly fell from 5.27% to 5.15%.

Source: Freddie Mac

After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023. Many experts and industry authorities believe they will follow a downward trajectory into 2024. Whatever happens, interest rates are still below historical averages.

Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Mortgage rate trends by loan type

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.

Mortgage rate strategies for October 2024

Mortgage rates continue to display their famous volatility in 2024. September’s big Fed cut and the likelihood of more provide optimism for descending rates, but ongoing inflation battles keep them in check.

Previously, the central bank held off on a rate hike at eight consecutive meetings, preferring to see if the economy would keep cooling organically. They finally deemed inflation’s downtrend as organic and made its first cut since 2020. As always, the committee said it would adjust its policies as necessary — which could mean additional cuts or possibly none at all.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Be ready to move quickly

Indecision can lead to failure or missed opportunities. That holds true in home buying as well.

Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.

“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.

And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.

Buyer demand is lower than a typical year, but the market usually heats up in spring and summer. Being decisive (and prepared) should only play to your advantage.

Shopping around isn’t only for the holidays

Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.

Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

• Your credit score and credit history
• Your personal finances
• Your down payment (if buying a home)
• Your home equity (if refinancing)
• Your loan-to-value ratio (LTV)
• Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

Mortgage interest rate FAQ

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

¹Today's mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

Selected sources:

• https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
• http://www.freddiemac.com/research/datasets/refinance-stats/index.page