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How far will mortgage rates fall this year? Here’s what some experts think
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At the end of 2023, with inflation easing, the Federal Reserve hinted that it would start cutting interest rates in 2024. Projections from the Fed’s December meeting forecasted the federal funds rate to fall to 4.6% — that’s down from the current target range of 5.25%-5.5%. The Fed’s actions and comments prompted mortgage interest rates to start falling to close out the year, and there could be room for further mortgage rate decreases in 2024.
However, many experts have a relatively subdued mortgage rate forecast for 2024. If rates do fall more, many experts predict a small change, based on current data, especially after the latest inflation report showed an uptick last month.
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How far will mortgage rates fall in 2024?
Over the past few months, many experts predicted that mortgage rates would fall in 2024. But to some extent, that mortgage market got a head start, with rates falling in December 2023 following the Fed meeting.
“Mortgage rates are already in a better place than they were in Q4 of 2023. The average 30-year rate is around 6.5% again which is welcome news, especially since they were hovering close to 8% in October,” says Bess Freedman, CEO at real estate company Brown Harris Stevens.
To some, this movement means that mortgage rates don’t have much more room to fall in 2024.
“I don’t think rates will fall much more for most of the year. We had a steep decline at the end of last year, which will probably stay stable from this point forward,” says Michael Gevurtz, CEO of Bluebird Lending.
Others, however, expect rates to decline further. Based on what the Fed has indicated, Freedman anticipates mortgage rates will drop again this year, “but nothing drastic — perhaps another 1% or so by the end of 2024,” she adds.
Similarly, Jeff Lichtenstein, founder of Echo Fine Properties, expects mortgage rates to fall slightly this year as the Fed cuts rates. For 30-year fixed-rate mortgages, “the target that we see is approximately 5.5%,” he says.
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When will mortgage rates fall in 2024?
If mortgage rates fall in 2024, as some predict, when might that occur? Part of the answer likely depends on what the Fed does in the coming months. While mortgage rates already started falling in December when the Fed took a softer stance, actual rate cuts could also lead to additional mortgage rate declines.
Lichtenstein projects that the Fed will make three quarter-point rate cuts in approximately the first half of 2024, with mortgage rates following similar stages of decreases, though he predicts around a 1% drop for mortgage rates.
Others, however, think mortgage rates will take longer to come down. “If rates fall, it won’t be towards the end of the year,” says Gevurtz. And even if rates do drop in 2024, it might not be a smooth downward slope.
“They’ve already started to come down, and I believe they will continue to go down, but not in a strictly linear fashion,” says Freedman.
What factors are experts monitoring to determine where rates are heading?
In addition to looking toward the Fed to see what will happen with mortgage rates, experts are looking at other economic and financial indicators — some of which inform the Fed’s decision — to try to get a better sense of where rates are heading.
“I’m watching economic data such as consumer spending, GDP growth, and inflation,” says Gevrurtz.
If these numbers fall, meaning the economy slows down, that could result in the Fed cutting rates. However, strong GDP numbers and other economic factors could mean the Fed maintains or even raises rates, which ultimately would affect mortgage rates. “When the economy is in great shape, mortgage rates tend to stay high,” says Freedman.
The bond market could also hold clues. “Mortgage rates are closely tied to bond yields, and they have been pretty unstable as of late. If they finally become more steady, mortgage rates will likely drop,” says Freedman.
Real estate data could also hold clues. For example, Gevurtz notes that he looks at housing starts, or new construction. While there can be multiple factors that affect whether housing starts go up or down, more housing starts often coincide with builders expecting lower rates.
Demand for new mortgages can also be telling. Many would-be sellers don’t want to give up their low mortgage rates in exchange for higher ones, while buyers have been on the sidelines due to cost and lack of supply, says Lichtenstein. Thus, there’s been a lack of mortgage demand, which has already contributed to rates falling, he adds.
The bottom line
The Fed has indicated that it will cut rates in 2024, but the Fed does not directly set mortgage rates. Following the Fed’s signals, mortgage rates already began falling at the end of 2023, so some think that there’s not much more room for mortgage rates to fall in 2024. Others, however, think mortgage rates could fall around another 1%, meaning 30-year-fixed rate mortgages would hit roughly 5.5%.
So, some homebuyers might prefer the certainty of buying a home now, rather than waiting to see what happens with mortgage rates and prices. But if you’re comfortable with your current situation, you might decide to wait, such as to see if supply improves while being able to lock in a more affordable mortgage rate. Learn more about your mortgage options here.
The following is a transcript of an interview with Sen. Mark Kelly, Democrat of Arizona, on “Face the Nation with Margaret Brennan” that aired on Oct. 6, 2024.
MARGARET BRENNAN: Joining us now is Arizona’s Democratic Senator, Mark Kelly. He’s in Detroit this morning on the campaign trail for the Harris campaign. Good morning to you, Senator.
SEN. MARK KELLY: Good morning, Margaret.
MARGARET BRENNAN: I want to talk to you about Arizona, but let’s start in Michigan, which is where you are right now. And it is going to be such a key state to a potential Harris or Trump victory. Vice President Harris is facing challenges among black men, working class people, as well as the Muslim and Arab populations skeptical of the White House support for Israel’s wars. What are you hearing on the ground there from voters?
SEN. KELLY: Well, my wife, Gabby Giffords, and I have been out here for a couple days. We’ve been campaigning across the country, Michigan, I’ve been in North Carolina, Georgia as well. I’ll be back to Arizona here soon. The vice president was out here speaking to Muslim organizations and the Arab community about what is at stake in this election and addressing the concerns that they have. What we’re hearing, issues about the economy, about gun violence, about, you know, supporting American families and the difference between Donald Trump and Kamala Harris. You know, Kamala Harris, who has a vision for the future of this country, Donald Trump, who just wants to drag us backwards.
MARGARET BRENNAN: Today in Dearborn, Michigan, there’s a funeral service for an American man who was killed in Lebanon by an Israeli airstrike. It just underscores how that community you’re talking about out in Michigan feel some of what’s happening in a personal way to their community. Given how close this race is, do you think this war and the expectation it could escalate could cost Democrats both a seat in the Senate and potentially the presidency?
SEN. KELLY: Margaret, nobody wants to see escalation and it’s tragic when any innocent person, whether it’s an American or Palestinian, lose their life in a conflict. Tomorrow’s one year since October 7th, when Israel was violently attacked. Israel has a right to defend itself, not only from Hamas, but from Hezbollah and from the Iranians. But, you know, I and my wife, you know, we feel for the community here who’s been affected by this. And that’s why the vice president was out here earlier, a few days ago, meeting with that community.
MARGARET BRENNAN: But it’s a live issue.
SEN. KELLY: Yeah, sure. I mean, there is an ongoing conflict in the Middle East. Israel is, you know, fighting a war now on, I think it’s fair to say, two fronts and then being attacked by the Iranians as well. And, they- they need to defend themselves, and we need to support our Israeli ally. At the same time, when women and children lose their life, innocent people in a conflict, it is- it is tragic.
MARGARET BRENNAN: You do sit on the Senate Intelligence Committee and so I know you know how intense the efforts are by foreign actors to try to manipulate voters going into November. Just this Friday, Matthew Olsen, the lead on election threats at the Department of Justice, told CBS the Russians are, quote, highlighting immigration as a wedge issue. That is such a key issue in Arizona. Are you seeing targeted information operations really focusing in on Arizonans right now?
SEN. KELLY: Not only in Arizona, in other battleground states. It’s the Russians, the Chinese, the Iranians, and it’s significant. And we need to do a better job getting the message out to the American people that there is a huge amount of misinformation. If you’re looking at stuff on Twitter, on TikTok, on Facebook, on Instagram, and it’s political in nature, and you may- might think that that person responding to that political article or who made that meme up is an American. It could be- it could look like a U.S. service member. There is a very reasonable chance I would put it in the 20 to 30% range, that the content you are seeing, the comments you are seeing, are coming from one of those three countries: Russia, Iran, China. We had a hearing recently, with the FBI director, the DNI, and the head of the National Security Agency. And we talked about this. And we talked about getting the word out. And it’s up to us, so thank you for asking me the question, because it’s up to us, the people who serve in Congress and the White House to get the information out there, that there is a tremendous amount of misinformation in this election, and it’s not going to stop on November 5th.
MARGARET BRENNAN: Understood. And we will do our best to help parse that for viewers. But on the topic of the border, President Biden did announce just this past week new regulations to keep in place that partial asylum ban that he rolled out back in June. That’s what’s credited with helping to bring down some of the border crossing numbers in recent weeks. It was supposed to be a temporary policy, dependent on how many people were crossing at a time. Do you think this is the right long term policy, or is this just a gimmick to bring down numbers ahead of the election?
SEN. KELLY: Well, the right long term policy is to do this through legislation. And we were a day or two away from doing that, passing strong border security legislation supported by the vice president, negotiated by the vice president, and the president and his Department of Homeland Security, with Democrats and Republicans–
MARGARET BRENNAN: But this is not legislation.
SEN. KELLY: –This is bipartisan. This isn’t. But the legislation was killed by Donald Trump. We were really close to getting it passed. That’s the correct way to do this. When you can’t do that, Margaret, when a former president interrupts the legislative process the way he did, which is the most hypocritical thing I’ve ever seen in my three and a half years in the Senate. After that happened, the only other option is executive actions. And this has gone from what was chaos and a crisis at our southern border to somewhat manageable. And if you’re the border- Border Patrol, you know, this is this- you need this. I mean, otherwise it is unsafe for Border Patrol agents, for CBP officers, for migrants, for communities in southern Arizona. So it’s unfortunate that this was the- these were the steps that had to be taken.
MARGARET BRENNAN: Okay.
SEN. KELLY: But that’s because the former president didn’t allow us to do this through legislation.
MARGARET BRENNAN: Senator, we have to leave it right there. Face the Nation will be right back.
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Sen. Mark Kelly says Americans need to know about “huge amount of misinformation” on election
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