Navigating the Mortgage Landscape in 2024: Experts Share Predictions
In the ever-changing terrain of the real estate market, especially in the realm of mortgage rates, 2023 witnessed some dizzying highs and, more recently, a notable cooldown. After reaching a peak of 7.79% in October—the highest in 2023—mortgage rates saw a significant retreat in December. This shift was attributed to the Federal Reserve's indications of waning inflation pressures, prompting a closer examination of what lies ahead for mortgage rates this year.
So, what does all this mean for mortgage rates in 2024, and how can you prepare for the upcoming market? We’re looking to experts and economists for some insights.
Mortgage Rates Will Continue to Ease
Over the past eighteen months, mortgage rates experienced a dramatic surge, reaching levels not seen in decades. The Federal Reserve responded with aggressive interest rate policies to curb inflation. Recently, rates have displayed a consistent downward trend due to the Federal Reserve's decision to pause rate hikes and the presentation of more moderate economic data, however.
According to Danielle Hale, Chief Economist at Realtor.com, there's a positive outlook for the coming year. "Mortgage rates will continue to ease in 2024 as inflation improves and Fed rate cuts get closer,"(1) she stated in a recent email as reported in a Forbes Advisor article. Hale anticipates that mortgage rates could approach 6.5% by the end of the year, a development that could bring much-needed relief in terms of affordability for prospective homebuyers.
Many Homeowners Will Be Able to Lower Their Mortgage by Refinancing
This shift will also reignite the flames of refinance activity, a sector that remained sluggish for the better part of 2023. Recent data from the Mortgage Bankers Association suggests a resurgence in refinance applications, reporting that applications for refinancing were 14 percent higher than a previous week in December 2023, and 10 percent above the activity during the same week in 20222. Experts are optimistic about refinance activity this year, especially if the Federal Reserve decides to cut rates. Borrowers who secured mortgages at higher rates are expected to seize the opportunity to reduce their monthly costs through refinancing.
"If [mortgage] interest rates dropped to even 5.5%, it could result in significant savings for these homeowners, as refinancing at that rate could result in an average monthly payment of $1,917 for them, a reduction of $284 every month,"(1) said Michele Raneri, Vice President of U.S. Research and Consulting at TransUnion.
How Much Will Mortgage Rates Go Down in 2024?
Although opinions vary on the precise extent of the decline, there is a prevailing agreement that mortgage rates are expected to decrease in 2024. The overall consensus suggests the possibility of rates nearing 6% by the close of the year. Below, is a table showing the mortgage rate predictions from different sources.(3)
As we navigate the complex currents of the real estate market in 2024, these predictions from industry experts offer valuable insights for both prospective homebuyers and current homeowners considering refinancing options. Remember to reach out to Brizzi Financial with any mortgage-related questions! We are never too busy to guide you in the right direction.