2024 Mortgage Rate Predictions: Will Rates Fall?

The year 2023 will go down as a downer for many prospective home purchase candidates. That’s because the average rates for the benchmark 30-year fixed-rate mortgage loan climbed higher this year than in decades and escalated at a pace even the experts didn’t anticipate.

But with 2023 drawing to a close, we can try to be hopeful that next year will bring financing relief to discouraged buyers and borrowers. Of course, there’s no guarantee that mortgage rates will come down significantly in the months ahead. For guidance on this issue, we contacted a panel of real estate experts and requested their mortgage rate predictions 2024-style.

In this article (Skip to…)

• Current mortgage climate
• Mortgage rate predictions
• Advice for homebuyers
• The bottom line

Where mortgage rates stand today

Tracing the trajectory of average rates for the 30-year home loan, we see that mortgage rates began around 6.48% in early January 2023, per Freddie Mac. In early March they shot up to 6.73%. Rates then crossed the 7% threshold by mid-August. In late October they reached a high for the year (so far), and stood at the highest levels since 2000, at 8%.

As of the time of this writing (mid-November), mortgage rates are averaging about 7.44%–down slightly from recent peaks but far higher than when the year began.

Assessing the current mortgage climate

Before we take a look at the 2024 mortgage rate predictions, it’s important to understand today’s mortgage rate environment. Here’s what our pros had to say on this topic.

Rick Sharga, president/CEO of CJ Patrick Company: “While mortgage rates have backed off from 8% in recent weeks, they’re still near a quarter-century high, and have crushed affordability, removing millions of prospective buyers from the housing market. This past year was the first time in US history that mortgage rates doubled in a calendar year, and have locked in potential home sellers who simply can’t afford to trade in a 3.5% mortgage and buy another home with 7.5% financing. According to Freddie Mac, almost two-thirds of homeowners with a mortgage have an interest rate of 4% or less; those homeowners are unlikely to list their homes for sale. So inventory remains extremely low, and there’s still enough demand that home prices have risen slightly on a year-over-year basis. Two factors that have contributed to the most recent uptick are the larger-than-usual spread between yields on the 10-year U.S. Treasuries and 30-year fixed-rate mortgages and the recent spike in bond yields to a 15-year high.”

Dennis Shishikov, adjunct professor of economics at City University of New York: “Observing the national mortgage landscape, we find ourselves navigating an environment of volatility that has roots in economic stimuli and the Federal Reserve’s responses to inflationary pressures. Surprisingly, interest rates have stayed high even as the current state of the housing market has started to show signs of slowing down. I expect the Fed to maintain a tight rein on inflation, which will influence rate increments. Their balancing act between stimulating growth and curbing inflation will be the fulcrum on which mortgage rate trajectories pivot.”

Selma Hepp, chief economist for CoreLogic: “While coming off their most recent peak, mortgage rates remain at the highest levels in over two decades and continue to significantly constrain housing market activity. And while mortgage rates were expected to increase with a rise in federal funds rates, a wider spread between mortgage rates and 10-year treasuries has resulted in a higher rate environment than many expected coming into this year. The mortgage rate spread has averaged about 300 basis points – up from an average of 170 basis points historically. The increase in spread has been driven by interest rate uncertainty but also the spreading of fixed costs over fewer loans, the Fed’s unwinding of mortgage-backed securities balances – which hasn’t been met with eager investor demand – and concerns over prepayment speeds.”

Richard Staniszewski, CEO, Hera Title: “What is most surprising to me when it comes to the current state of mortgage rates at a national level is that many experts have gotten it wrong. Mortgage rates are in lockstep with inflation and are currently trending much higher than forecasted. Basic economics indicate that an increase in money supply beyond normal growth rates shows a propensity for higher inflation. We find ourselves now having to react to the complexity of the inflationary environment with the limited tools of the Fed. The Fed only can react to data, while our policymakers can shape the outcome of the data.”

Christopher Naghibi, executive vice president/chief operating officer, First Foundation Bank: “What we are experiencing now is a return to normalized and traditionally healthy rates. While we might be closer to or just below historically average interest rates, the affordability crisis in America today has made buying a home unaffordable in relation to wages in history. Mortgage rates will continue to be in flux until we get out of the current yield curve inversion. That means the 10-year treasury, or the long end of the curve, will have to rise until it is higher than the short end of the curve. I anticipate this to continue to push up mortgage rates and hold them above 7% for the next 12 months.”

Jason Gelios, Realtor, Community Choice Realty: “As we approach the end of 2023, we’re seeing the Fed holding off on increasing the interest rates further. This is due to their goal of curbing inflation being achieved—although it certainly doesn’t feel like it. We enjoyed lower interest rates for such a long time that the Fed was due to increase interest rates to curb inflation.”

Mortgage rate predictions for 2024: Will rates go down?

Curious about what home loan rates will average over the next year? Here’s a roundup of our panel’s projections for the 30-year and 15-year fixed-rate mortgages.

Ralph DiBugnara, president of Home Qualified: “I believe the average 30-year fixed rate for 2024 will be 7.0%. The 15-year fixed-rate loan will average 6.5%. After a significant period of rate raises by the Fed, it has never taken longer than nine months for them to cut that rate. If history repeats itself, we will see lower mortgage rates later in the second quarter of 2024, bringing the overall average down.”

Martin Orefice, CEO of Rent To Own Labs: “As far as the 2024 mortgage rate predictions, I expect 30-year fixed-rate mortgage rates to hover around 7.0% for most of next year. Not only is the Fed not lowering rates any time soon, but mortgage lenders are also desperate for high-rate mortgages to replace all their pre-2021 mortgages; they can’t afford to drop rates. Fifteen-year fixed-rate mortgages will probably creep down below 7.0% in 2024, perhaps as low as 6.5% for well-qualified borrowers. I expect rates to start moving slowly, dropping more by the third and fourth quarters, and perhaps not move at all in Quarter 1.”

Hepp: “The average mortgage rate for 2024 is likely to be around 6.7%, with larger drops – pulling the average to 6.7% – expected later in the year if the Fed starts cutting the funds rate. Falling mortgage rates will largely reflect cooling economic conditions and slowing inflation, which is what the Fed is squarely focused on. If the economy remains resilient and there are no clear signs of rapid cooling in the labor market, the Fed is likely to act in line with what their predictions suggest, which means that they won’t cut rates until the third quarter of next year. However, if signs emerge of rapid economic activity cooling and increase in unemployment, the Fed could cut sooner.”

Sharga: “Assuming that the Fed holds the Fed Funds rate steady for the first half of 2024 and that 10-year bond yields don’t drop below 4%, we can probably expect rates to decline slowly and steadily, starting the year around 7.0% in Quarter 1, 6.8% in the second quarter, 6.6% in the third quarter, and end the year around 6.4%. Rates on the 15-year fixed-rate mortgage are likely to follow a similar pattern, starting the year around 6.5%, declining to 6.3% in the second quarter, 6.1% in the third quarter, and possibly dipping below 6% to 5.9% at the end of the year.”

Naghibi: “I think a rate above 7.0% on average is likely, given that the yield curve is still inverted. I recognize that Bloomberg, the Chicago Mercantile Exchange, and many economists anticipate at least two rate cuts during 2024. However, banks have been facing unprecedented net interest margin constraints. They are making less money and will want to recoup their earnings in 2024, even if rate cuts occur. I expect deposit rates to drop in line with Fed Funds rate cuts, but with an inverted yield curve I do not see 10-year treasuries falling much lower. And, similarly to the 30-year rates, I do not anticipate a drop below 6.25% on the 15-year fixed rate mortgage.”

Staniszewski: “When it comes to the 2024 mortgage rate predictions, I foresee 30-year loan rates settling into the 6.0% to 6.5% range in the back half of 2024 versus a 5.0% to 5.5% range for the 15-year mortgage. When you look at the individual variables that led up to the current inflationary environment, some clear trends will impact mortgage rates in 2024. The rapid rise in the Fed Funds rates has had a big impact on taming the inflationary environment. Most data points indicate that rates may be stabilized in the near term. As we start to get into 2024, I predict we will start to see the hardships of higher rates and the current monetary policy negatively affect the economy.”

Gelios: “We will see mortgage rates on the 30-year mortgage decrease and hover to about 6.0% by the spring of 2024. I foresee the 15-year fixed-rate loan averaging 0.50% less, at about 5.5%. Mortgage rates will have their biggest decrease in the first quarter of 2024, with the remaining quarters floating around the same average rate. We may see some small decreases in rates through 2024. However, the biggest decrease will be before the spring buying season.”

Shirshikov: “For the 30-year fixed mortgage rate, I foresee an average of 8.25% throughout next year. These 2024 mortgage rate predictions are informed by a careful analysis of ongoing economic recovery patterns, inflationary trends, and policy shifts. Similarly, for the 15-year fixed mortgage rate, I anticipate an average hovering around 7.75%, taking into account the Federal Reserve’s likely continued stance on keeping interest rates stable. I expect a gradual increase in mortgage rates in Quarter 1, with a possible plateau in Quarter 2 as the market absorbs the Fed’s policy cues. Quarter 3 might bring a modest dip in response to market corrections, followed by a Quarter 4 that could see rates stabilizing as the market anticipates the year ahead.”

Advice for homebuyers and homeowners in 2024

Based on their 2024 mortgage rate predictions and other factors—including home prices, housing inventory, and buyer demand—here’s what our team recommends when it comes to buying a home, refinancing an existing mortgage, and tapping into your home equity.

Hepp: “Timing mortgage rates is a risky proposition because one could end up waiting too long while home prices continue to increase. If a household is ready and able to buy and can afford their mortgage payment and plans to live in the home for at least a few years, they should do it. Home price forecasts suggest home prices will continue to rise, which means they will be building equity in their home and growing their wealth. Also, competition is likely to heat up again once mortgage rates decline which means facing multiple bids and paying more than the listed price. In the current market, sellers are willing to negotiate – especially if they are pressed to sell.”

Naghibi: “I would wait to buy and look at your local market each quarter. Now, more than ever, holding cash is not a bad thing. Be patient and time your market based on what it looks like. Keep in mind that some markets have increased prices by over 40% over two years, leading to this interest rate-increasing environment. If you need a home, you can’t put a price on the utility and benefit to you, but only if it makes financial sense. Also, if you have a rate below 5.0%, avoid a refinance unless you absolutely have to. Perhaps look into a second trust deed or a home equity line of credit (HELOC) if necessary.”

Staniszewski: “I firmly believe that purchasing a home is always a quality investment for the long term, and 2024 will be no exception, regardless of the interest rate environment. My advice to anybody looking to purchase in ’24 and beyond is to ensure you have the right team in place to advise on current market opportunities, creative financing, and value-added services. Allow them to help you match your personal goals, current financial situation, and long-term outlook to find the perfect scenario for you, both in lifestyle and financial terms.”

Gelios: “Knowing your budget and where the numbers are is key to buying a home successfully. While it may seem like solid advice to wait until 2025 to purchase a home, those who wait will be faced with even higher home prices and more buyer competition. Home buyers should always be careful not to overspend or be unrealistic about what they can or can’t afford. They should not be too focused on the mortgage rate because a refinance is always an option should the rates decrease in the coming years. Additionally, those looking to refinance in 2024 should look at how long it will take them to recoup their closing costs.”

Sharga: “Buyers who can handle the financial responsibility of homeownership, and who can afford monthly payments at today’s home prices and mortgage rates, are probably better off buying than waiting. Limited supply will likely continue to drive home prices higher, and it’s unlikely that mortgage rates will plummet in 2025 for those who wait. Borrowers with equity might still consider tapping into those funds to pay down higher cost debt charged by credit cards, personal loans, auto loans or student loans, which typically have much higher interest rates than rates available on a cash-out refinance loan.”

DiBugnara: “Interest rates, at this current time, should only impact buying or not buying if the home you are looking at is out of your budget. If a buyer can find a home that fits their needs and budget it is a very good time to buy. Any waiting period to take advantage of a lower rate market will only result in paying a much higher purchase price because of increased competition.”

Orefice: “The housing market may get incrementally better in 2024, but it will still be a market in which smart players will want to wait for lower rates if they can possibly manage it. If you absolutely have to get a mortgage in 2024, aim for a short-term ARM (adjustable-rate mortgage) that you can refinance when rates start to fall.”

Shirshikov: “My advice is to approach the decision with a long-term perspective. Prospective buyers should meticulously analyze their financial standing, consider the potential for rate locks, and stay attuned to market trends. While waiting until 2025 may seem prudent for some, for others the right moment could be when the individual financial conditions align with market opportunities.”

The bottom line

Hopefully, these 2024 mortgage rate predictions and recommendations will help you make a more informed decision on whether or not to purchase and finance a home. But remember that your personal situation is unique, and the advice above may not fit with your life goals, timing, or affordability.

For best results, it’s always smart to consult closely with a trusted real estate agent or Realtor, an experienced lending professional who can suggest different loan options that meet your financial needs, a real estate attorney who will ensure that you are legally safeguarded during a transaction, and a personal finance expert or certified financial professional who can help you crunch the numbers and better determine if buying now versus later is the right move.