Joseph Murphy on LinkedIn: Housing Market Forecast for 2024 Elevated mortgage rates, out-of-reach… (2024)

FAQs

What is the mortgage rate forecast for 2024? ›

Mortgage rate predictions 2024

The MBA's forecast suggests that 30-year mortgage rates will fall into the 6.4% to 6.7% range throughout the rest of 2024, and Fannie Mae is forecasting the same. NAR believes rates will average 7.1% this quarter and fall to 6.5% by the end of 2024.

By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%. Meanwhile, Wells Fargo's model expects 5.8%, and the Mortgage Bankers Association estimates 5.5%. ResiClub takes all forecasts with a grain of salt.

MBA: Rates Will Decline to 6.4% In its April Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.8% in the first quarter of 2024 to 6.4% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the fourth quarter of 2025.

Why have mortgage rate forecasts risen? With inflation picking up again, the Fed is holding off on rate cuts, which can reignite an escalation in prices. Coming into the year, many people expected as many as six or seven rate cuts in 2024, which was then scaled back to two or three.

Mortgage Rate Projection for 2024

As inflation slows and the Federal Reserve is able to start cutting the federal funds rate, mortgage rates are expected to trend down as well.

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.

Projected Interest Rates in the Next Five Years

Then, 3.5% in the third, and 3.25% in the final quarter of 2024. In 2025, ING predicts a further decline to 3%. The University of Michigan inflation expectations in the US for the five-year outlook were revised slightly higher to 3% in August 2023.

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.

Interest rate predictions in the UK in 2025 and beyond suggest a period of cautious adjustment following the expected easing in 2024. Bank of England interest rate forecasts for 2025, informed by market analysts and financial institutions, anticipate rates to stabilise around 3-3.4%.

Will mortgage rates ever be 3% again? ›

After all, higher rates equate to higher minimum payments. So, you may be wondering if, and when, mortgage rates might fall to 3% or lower again - and whether or not it's worth waiting to buy a home until they do. Although rates could fall to 3% again one day, it's not likely to happen any time soon.

In summary, buying a house in California in 2024 may be a good time for some buyers, depending on their personal and financial situation. The housing market is expected to rebound from a sluggish year in 2023, with more supply and demand, higher prices and affordability, and lower mortgage rates and inflation.

When interest rates go up, mortgages become more expensive as the interest rate on mortgages also goes up. This makes it more costly for consumers to purchase a home. When homes are more expensive, the demand for them decreases.

Mortgage rates may continue to rise in 2024. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022 and 2023.

If inflation growth does start to slow down, the Fed may still choose to cut rates sometime in the second half of the year. And, if they do, mortgage rates should drop.” On the other hand, hot inflation, additional pressure on rates from the Fed and waning demand for U.S. bonds could push rates higher, he adds.

The general consensus among industry professionals is that mortgage rates will slowly decline in the last quarter of 2024. The projected declines have shrunk, though, in recent months. At the start of the year, for instance, Fannie Mae predicted rates would drop to 5.8%.

The lowest auto loan rate in 2023 was 6.15 percent for a four-year used car loan in mid-January. Bankrate's expert predicts five-year new car loan rates will reach an average of 7.0 percent and four-year used car loans, 7.5 percent by the end of 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%.