While many experts predicted that mortgage rates would start falling quickly in 2024, inflation has remained higher than many expected. The latest annual inflation rate for the Consumer Price Index for All Urban Consumers (CPI-U) came in at 3.4%, according to the Bureau of Labor Statistics. And, amid relatively hot data like this, the Federal Reserve has continued to hold the federal funds rate steady since July 2023.

While the Fed does not directly dictate mortgage rates, its policy decisions can influence consumer interest rates. As such, mortgage interest rates remain roughly in line with where they were last summer, with 30-year fixed-rate mortgages generally in the low 7% range, according to Freddie Mac data.

Today’s high rates can make buying a home expensive, so many prospective buyers are keeping an eye on mortgage interest rate forecasts and waiting for a mortgage interest rate drop. But will buyers get relief this summer or will they have to keep waiting?

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Will mortgage rates drop this summer? Here’s what experts say

If you’re wondering whether mortgage rates will drop this summer, here’s what some experts are saying about the possibility: 

The case for mortgage rates dropping this summer

Even if the June Federal Reserve meeting doesn’t move the needle much, expectations around future rate cuts could help send mortgage rates down.

“I believe mortgage rates will drop this summer, but not substantially. With the expectation that the Fed will not start cutting the fed funds rate until the fall, mortgage rates will heavily rely on weekly economic data, rather than the summer Fed meetings,” says Brian Shahwan, VP mortgage banker and broker with The Melissa Cohn Group at William Raveis Mortgage.

However, there could be ups and downs along the way as this economic data rolls in, Shahwan notes.  

“The stronger the data comes in, the higher the mortgage market will be pushed. Similarly, with weaker economic data and inflation numbers cooling, we’ll continue to see mortgage rates softening. For this reason, it is a good idea for buyers to work with a lender that can lock at a dip and/or offer a float-down option. A float down allows borrowers to relock at a lower rate, if the market improves before closing,” says Shahwan.

It’s also possible that increased homebuying demand could drive mortgage rates down slightly as lenders compete to scoop up this business. However, the effect could be minor.

“Personally, I do not believe we will see a meaningful drop in mortgage rates by the end of summer 2024. Borrowers should expect rates to remain relatively consistent, with only marginal decreases during the summer house-hunting season,” says Tai Christensen, co-founder and president at Arrive Home.

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The case for mortgage rates not dropping until later

While Christensen sees a possibility of marginal decreases this summer, she and many other experts primarily expect rates to fall later on.

“The good news is the mortgage interest rate forecasts are reflecting a gradual decrease through year-end, if the Fed is satisfied with the decrease in inflation. I believe by the end of 2024, we will see rates fall to closer to the mid to slightly lower 6% interest,” says Christensen.

Similarly, Brian Durham, vice president of risk management and managing broker at Realty Group LLC and Realty Group Premier, says he’s “not optimistic about mortgage rates this summer” but projects more of a decrease in late 2024.

“With the recent inflation numbers and the continued deficit spending coming out of Washington, I think mortgage rates will stay steady through the summer and then trend downward into the low to mid-6% range in the fourth quarter,” he says.

Even if economic data shows signs of a slowdown — which can translate into lower mortgage rates — it can take time for these changes to play out.

“Much like looking in the rear-view mirror, there is often a delay in the trajectory of interest rates until economic changes occur, and then make their way to the index reports. For that reason, we may need to see a few more reporting cycles before we see any substantial decrease in interest rates,” says Josh Jampedro, mortgage expert at Home Loan Advisors.

“It has become clear that mortgage rates will soon point lower, but the projection for this decrease is likely late 2024 or even early 2025 once a shift in the economy becomes more obvious,” he adds.

The bottom line

With inflation still relatively high, it could take more time for mortgage rates to come down. It’s possible that there will be a slight decrease this summer, but the consensus seems to lean more toward meaningful interest rate changes coming later this year or in early 2025.