There are a few really important numbers when it’s time to obtain a home loan: your credit score, the amount you want to borrow, and the interest rate. The news is full of talk about interest rates lately. Will they go up? Will they go down? Will they stay down?

It’s a losing battle to follow the news on mortgage interest rates on a daily basis if you’re hoping to lock in the best possible loan rate. However, you can certainly get a sense of key trends by keeping your eyes and ears open when it comes to the economy and the bigger picture of the housing market.

However, before you do that, you’ll want to make sure you understand what factors are at play that will be influencing mortgage rates in 2024.

The overall economy affects mortgage rates. When the gross domestic product (or GDP) and employment rise, it’s a sign of a growing economy, so there is a greater demand for goods and services, including real estate. A growing economy creates competition from those wishing to borrow money. This demand causes interest rates to rise.

The opposite is true in a slowing economy. When demand falls, interest rates tend to go down.

In terms of home loans, the “supply” is the money (or credit) available to lend. A high demand for mortgages means banks have less money to lend; therefore, the cost of a loan goes up via higher interest rates. 

This also means that when there is more money to lend, or an increase in the supply of credit, the cost of borrowing goes down in the form of reduced interest rates. 

Another factor is how other debts impact a bank’s ability to lend money. For example, a missed credit card payment or mortgage payment will reduce the amount of credit available in the market. When the credit supply tightens, that creates higher interest rates. 

Everyone is affected by inflation. You, your mom, your dry cleaner, and even your bank. 

Inflation occurs when the money supply used to purchase products exceeds the products available for purchase. The bigger the gap, the higher the inflation. Put another way, a high rate of inflation means your dollar doesn’t go as far. You have to do more with less.

Higher inflation will typically cause Treasury yields and mortgage rates to rise as well. This occurs because investors demand higher rates as compensation for the decrease in the purchasing power of money they are paid over the course of the loan.

When the Federal Reserve raises or lowers the federal funds rate, which is the rate lenders charge one another, it can create a ripple effect resulting in higher or lower mortgage rates. While the Fed Rate doesn’t have a direct impact on mortgage rates, it impacts several markets across the globe, and the effects are felt in the mortgage market.

The fed funds rate can be as low as zero, and it affects the bottom line of those offering credit. When the Fed is trying to control inflation, or cool the market, they start raising this rate in increments over time. When they’re trying to spur the economy, they start lowering the fed funds rate.



Recently inflation has started to cool, a signal that the rate increases over the past few years have worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July.