CBS News
Here’s how much homebuyers will save if they wait for rates to drop
Yagello Oleksandra/Getty Images
Over the past few years, mortgage rates climbed steeply compared to the record-low days of the pandemic, and that — coupled with rising home prices and high inflation — has made for quite the challenge for hopeful homebuyers. Fortunately, though, that could be changing soon.
Inflation has been improving over the last three months, and mortgage rates dropped slightly in tandem. A lackluster jobs report then caused mortgage rates to dip even further, with rates hitting a 15-month low. But the Federal Reserve has also indicated a cut to its federal funds rate could be in the cards this fall, which would likely equate to even lower mortgage rates.
That, in turn, begs the question: Should homebuyers (or refinancers) wait it out for those rates to come to fruition? And if they do, how much could they potentially save?
Ready to lock in a mortgage rate? Start comparing your top mortgage loan options online now.
Here’s how much homebuyers will save if they wait for rates to drop
Here’s what experts had to say about homebuyers’ potential to save on a mortgage loan if they wait for mortgage rates to drop further.
Rates might not fall significantly
If the Fed lowers rates, it will reduce mortgage rates, too, experts say — but we may not see as big of a dip as some expect.
“Rates have already started falling ahead of a Fed rate cut. The economy is slowing down, which lowers inflation. As inflation drops, so do mortgage rates,” Debra Shultz, vice president of lending at CrossCountry Mortgage’s The Shultz Group, explains.
But just how low will they go? That’s less clear.
The Fed is likely to reduce its rate by only a small amount at the start — about 25 basis points to 50 basis points (so 0.50% to 0.25%). In fact, the CME Group FedWatch Tool, which predicts future Federal Reserve moves, has the chances at about 50-50 for its September meeting. This could mean an equally small decline in mortgage rates, too.
Industry forecasts back that up. Fannie Mae currently expects the year to end with a 6.7% average rate, while the Mortgage Bankers Association predicts a slightly lower 6.6% average.
Beyond the end of the year, rates may fall further.
“I believe the slow and steady decline will continue into 2025, where we could see average rates drop by as much as 1% or more by the end of 2025,” says Darren Tooley, a loan officer and sales manager at Union Home Mortgage. “That would put average interest rates in the low 6% range and on the cusp of breaking beneath 6%.”
Find out how affordable the right mortgage loan could be today.
It depends on your loan amount
While those 2024 rate cuts might not seem huge, even slightly lower mortgage rates can still help in the affordability department — especially if you need a larger loan amount. Between today’s low housing supply and rising prices, this might be the case for many buyers.
“As home prices have climbed over the years, so has the average loan balance,” Tooley says. “What you can save by reducing the rate on your mortgage by 0.5% on a $450,000 loan is going to be much greater than the 0.5% savings on a $175,000 loan.”
He’s right: On a $450,000 30-year loan, the difference between a 7% rate and a 6.5% rate would save you about $150 per month and nearly $59,000 in long-term interest charges. On a $175,000 loan, the savings would be significantly lower: $58 per month and about $21,000 in interest.
Trying to time your purchase isn’t always best
If you can wait until 2025, when mortgage rates are potentially even lower, the savings may grow. MBA predicts a 6.2% rate by the end of next year, while Fannie Mae’s forecast is at an even 6%.
“There’s no way of knowing how low rates will go,” says John Aguirre, a mortgage broker at Loantown.
There’s also a chance that lower rates drive much higher demand from buyers — which would drive up home prices in tandem. This could make waiting it out a moot point.
“Buyers have been sitting on the fence waiting for rates to fall the last few years,” Shultz says. “There’s a lot of pent-up demand, but low inventory. As rates fall, more buyers will enter the market, and hello competition. You’ll see more bidding wars, which will drive up prices.”
For this reason, experts generally don’t recommend trying to time the market and instead recommend focusing on when the timing is right for your budget and lifestyle needs. If the number works, pull the trigger. You can always refinance later if rates drop.
The mother of the embattled hip-hop mogul Sean “Diddy” Combs released a statement Sunday defending her son against the criminal charges and multiple allegations of sexual misconduct he is currently facing while in federal custody in New York.
Combs, 54, has been detained at the Metropolitan Detention Center in Brooklyn since pleading not guilty on Sept. 17 to federal charges of sex trafficking, racketeering conspiracy and transportation to engage in prostitution.
In a statement released through her lawyers, Janice Smalls Combs says it has been “unbearable” to witness “what seems to be like a public lynching of my son before he has had the opportunity to prove his innocence.”
She then mentions that her son “has made mistakes in his past” and refers to an episode caught on security video that appeared to show Combs attacking singer Cassie, his former girlfriend, in a Los Angeles hotel hallway in 2016. In May, Combs apologized for the incident, saying his behavior was “inexcusable” and that he took “full responsibility” for his actions.
In November, Cassie, whose legal name is Casandra Ventura, filed a lawsuit accusing Combs of rape and abuse during their relationship; he denied the accusations. They reached a settlement the following day.
The indictment against Combs refers to the incident caught by the hotel security cameras. According to the indictment, Combs attempted to bribe a hotel security staff member who intervened in the incident to keep them quiet.
“My son may not have been entirely truthful about certain things, such as denying he has ever gotten violent with an ex-girlfriend when the hotel’s surveillance showed otherwise,” Janice Smalls Combs says in the statement. “Sometimes, the truth and a lie become so closely intertwined that it becomes terrifying to admit one part of the story, especially when that truth is outside the norm or is too complicated to be believed. This is why I believe my son’s civil legal team opted to settle the ex-girlfriend’s lawsuit instead of contesting it until the end, resulting in a ricochet effect as the federal government used this decision against my son by interpreting it as an admission of guilt.”
She adds that it has been “agonizing” to see people joke about her son’s situation “over lies and misconceptions.”
At the end of the statement, she asks fans and the public “to not judge him before you’ve had the chance to hear his side.”
“My son is not the monster they have painted him to be,” she says. “I can only pray that I am alive to see him speak his truth and be vindicated.”
In the indictment, prosecutors allege that since 2008 Combs has been part of a criminal organization that engaged in or attempted to engage in sex trafficking, forced labor, kidnapping, arson, bribery, obstruction of justice and other offenses.
Prosecutors accused Combs of using his business empire as a criminal enterprise to conceal his alleged abuse of women at events Combs referred to as “Freak Offs.”
“The ‘Freak Offs’ sometimes lasted days at a time, involved multiple commercial sex workers and often involved a variety of narcotics, such as ketamine, ecstasy and GHB, which Combs distributed to the victims to keep them obedient and compliant,” U.S. Attorney Damian Williams, of the Southern District of New York, told reporters when the indictment was unsealed.
On Oct. 1, Texas attorney Tony Buzbee said he was representing 120 accusers who have come forward with new sexual misconduct allegations against Combs. Buzbee said he expects lawsuits to be filed within the next month. Buzbee described the victims as 60 males and 60 females, and that 25 were minors at the time of the alleged misconduct.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
After days of uncertainty, the Federal Aviation Administration announced Sunday that SpaceX had been cleared to press ahead with the planned Monday launch of the European Space Agency’s $398 million Hera asteroid probe, stormy weather permitting.
With forecasters calling for an 85% chance of thick clouds and showers that would trigger a delay, Hera’s launch atop a Falcon 9 rocket from pad 40 at the Cape Canaveral Space Force Station is targeted for 10:52 a.m. EDT Monday. The forecast is 75% “no-go” if launch is delayed to Tuesday.
“The last hurdle is the weather. So, please, please, I need you to do something about it!” Hera project manager Ian Carnelli joked with reporters Sunday. “It’s the only thing I really cannot control. … It looks like we have some opening around the time of launch, but it’s really impossible to say at the moment.”
ESA
Hurricane Milton, meanwhile, poses threats throughout the week as the cyclone is expected to cross the Florida peninsula Wednesday and move out over the Atlantic Ocean near Florida’s Space Coast.
Launch of NASA’s $5.2 billion Europa Clipper mission, which had been planned for Thursday from the Kennedy Space Center, has been put on hold pending passage of the storm.
“The safety of launch team personnel is our highest priority, and all precautions will be taken to protect the Europa Clipper spacecraft,” said Tim Dunn, a senior launch director with NASA’s Launch Services Program.
“Once we have the ‘all-clear’ followed by facility assessment and any recovery actions, we will determine the next launch opportunity.”
Likewise, the return to Earth of three astronauts and a Russian cosmonaut aboard a SpaceX Crew Dragon ferry ship has been delayed by predicted bad weather.
Crew 8 commander Matthew Dominick, Mike Barratt, Jeanette Epps and cosmonaut Alexander Grebenkin, launched to the International Space Station last March. They had planned to undock Monday, returning to Earth to close out a 217-day mission.
National Weather Service
But NASA announced Sunday their departure would be delayed to at least Thursday because of expected bad weather. Crew Dragon ferry ships require calm winds and seas in the Gulf of Mexico or the Atlantic Ocean to permit a safe splashdown.
As for the Falcon 9, the FAA clearance only applied to the Hera launch while the agency continues overseeing an investigation into what caused a Falcon 9 second stage to malfunction Sept. 28 and miss its targeted re-entry point into Earth’s atmosphere over the Pacific Ocean.
SpaceX routinely sends spent second stages into the atmosphere for destructive breakups at the end of their missions to prevent possible collisions or other problems that might add to the space debris already in low-Earth orbit.
The FAA wants to make sure the problem is understood and corrected so future re-entries are carried out as planned, ensuring any debris that survives re-entry heating will splash down harmlessly in targeted ocean impact “footprints,” well away from shipping lanes and populated areas.
The second stage being used for the Hera mission will boost the space probe into deep space, using all of its propellant in the process. It will not return to Earth, so a malfunction, should one occur, would pose no safety threat.
“The FAA has determined that the absence of a second stage reentry for this mission adequately mitigates the primary risk to the public in the event of a reoccurrance of the mishap experienced with the Crew-9 mission,” the agency said in a statement, referring to the most recent Falcon 9 flight.
NASA
“Safety will drive the timeline for the FAA to complete its review of SpaceX’s Crew-9 mishap investigation report and when the agency will authorize Falcon 9 to return to regular operations,” the statement concluded.
The FAA did not address plans to launch the Europa Clipper atop a Falcon Heavy rocket Thursday for its long-awaited mission to Jupiter and its ice-covered moon Europa.
Like the Hera mission, the Clipper’s upper stage, the same one used for all Falcon-family rockets, will not return to Earth. Instead, it will burn all of its propellants to accelerate the probe to an Earth-escape velocity of 25,000 mph.
But FAA clearance to proceed, assuming it comes in time, likely will be a moot point, at least in the near term. It is unlikely the Clipper and its Falcon Heavy rocket will be moved to the Kennedy Space Center launch pad until after Milton has passed through the area.
