If you’ve been keeping an eye on the housing market, you’re likely aware that mortgage rates are currently quite high. As of November 20, 2023, the average rate for a 30-year fixed-rate mortgage stands at 7.74%, while the average for a 15-year fixed-rate mortgage is 7.01%. These figures, coupled with soaring home prices, have deterred many potential homebuyers from making a move.
However, there is hope on the horizon. According to industry experts, we may see some relief in 2024, although it may take some time. Don’t expect a significant drop in mortgage rates right at the start of the year. Instead, projections suggest that rates will remain steady for a while and potentially decrease in the latter half of 2024. Nick Bailey, the President and CEO of real estate company RE/MAX, shares this sentiment, stating, “I believe that we’ll see similar rate activity in the first half of 24, but it wouldn’t surprise me if rates go down in the second half.”
While several factors could contribute to a decline in mortgage rates, the key factor to watch is the Federal Reserve’s decisions regarding the federal funds rate. Over the past 18 months, the Fed has been raising this rate to combat inflation. Bailey believes this action was taken too late, resulting in the persistently high rate environment we currently face. However, in 2024, if inflation remains under control, the Fed might consider cutting rates, potentially leading to mortgage rates dropping to around or under 7%.
Frequently Asked Questions (FAQ):
Q: Will mortgage rates decrease in 2024?
A: While it’s likely that mortgage rates will remain high in the short term, there is a possibility of rates declining in the second half of 2024.
Q: What factors could contribute to this decline?
A: The main factor to watch is the Federal Reserve’s decisions regarding the federal funds rate. If inflation remains under control, the Fed might cut rates, leading to potential drops in mortgage rates.
Q: Should I wait for mortgage rates to drop before buying a home?
A: It’s important to consider more than just interest rates when making a home purchase. While waiting for rates to drop is an option, home prices may continue to rise, making it difficult to find the ideal property within your budget. Consider all available mortgage products and make an informed decision.
Q: Are there alternative mortgage options to consider?
A: Yes, apart from the traditional 30-year fixed mortgage, you can explore adjustable-rate mortgages (ARMs). With an ARM, your interest rate is periodically adjusted, and there are rate caps available to prevent excessive increases while still benefiting from potential rate declines.
In conclusion, while mortgage rates are currently high, there is a possibility of rates decreasing in the latter half of 2024. However, it is important to consider various factors beyond interest rates when making buying decisions. Stay informed, explore alternative mortgage options, and choose the approach that aligns with your goals and financial circumstances.