It’s no secret that mortgage rates have significantly affected housing affordability over the past few years. However, there’s light at the end of the tunnel—rates have started to come down. In fact, we’ve recently hit the lowest rates of 2024, according to Freddie Mac (see graph below):
If you’re thinking about buying a home, you might be wondering: how much lower will rates go? Here’s what experts are predicting.
Expert Projections for Mortgage Rates
The general consensus among experts is that rates will likely continue to decline, especially as inflation eases and the economy cools. However, there will be fluctuations along the way as new economic reports are released.
The key is to focus on the larger trend and not get distracted by short-term fluctuations. Compared to the peak in May, rates have already dropped by roughly a full percentage point.
Looking ahead, many experts are predicting that rates could dip into the low 6% range in the coming months, depending on how the economy and the Federal Reserve respond. In fact, some experts are already revising their 2024 mortgage rate forecasts to be more optimistic. For example, Realtor.com notes:
“Mortgage rates have been revised slightly lower as signals from the economy suggest that it will be appropriate for the Fed to begin cutting its Federal Funds rate in 2024. Our yearly mortgage rate average forecast is now down to 6.7%, and we’ve adjusted our year-end forecast to 6.3%, down from 6.5%.”
Determine Your Target Mortgage Rate
So, what does this mean for you and your homebuying plans? If you’ve been waiting for rates to drop, it’s already happening. The next step is to figure out what rate you’re comfortable with based on expert predictions and your budget. As Sam Khater, Chief Economist at Freddie Mac, points out:
“The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move.”
Ask yourself: at what mortgage rate would I feel ready to buy? Whether your target rate is 6.25%, 6.0%, or even 5.99%, it’s a personal decision. Once you’ve identified your target rate, you don’t need to track rates daily. Instead, connect with a local real estate professional who can monitor rates for you and alert you when they reach your ideal number.
If rising mortgage rates have caused you to put your plans on hold, it’s time to think about the rate that would make you feel comfortable jumping back into the market. Once you’ve settled on that number, reach out to a member of our team who can keep you informed and let you know when the time is right to make your move.