If you were trying to purchase a home in 2023, you probably encountered at least one of two obstacles: high rates and low inventory. While inventory primarily depends on new home builds and sellers waiting for a stabilized market, predicting mortgage rates in the next year can be more challenging.
Housing rates generally go as the economy goes. They increase when the economy is strong with high job growth. And when the market isn't as good, rates will drop, making it more affordable for borrowers to take out loans.
Inflation can also affect rates. Rising inflation can limit a borrower's buying power and cause the Federal Reserve Bank to increase interest rates. This forces lenders to raise their rates to compensate for the higher cost of borrowing money.
According to J.P. Morgan's strategists, the U.S. economy will likely slow in 2024 but should avoid a recession. They also predict that the Fed will start to cut interest rates sometime in the second half of 2024, which could result in lower mortgage rates.
Looking at different financial sources, 30-year fixed mortgage rates in 2024 could average between 6.1% and 7.50%. Economist Lawrence Yun predicts rates will rise to 7% and reach around 6% by spring 2024.
Here are four 2024 mortgage rate predictions by housing professionals:
|Average 30-year fixed rate in 2024
|National Association of Realtors
|National Association of Home Builders
Please remember that these are just forecasts; actual rates could be higher or lower. Talking to a mortgage lender for an accurate quote is always best.