Why We Believe Mortgage Rates Will Drop in 2024
webadmin • October 16, 2023
Why We Believe Mortgage Rates Will Drop in 2024
We understand how incredibly frustrating and disheartening the current mortgage rate environment is.
Everybody had a prediction going into Summer 2023 that mortgage rates would decrease. Unfortunately, the resilient U.S. economy, the Fed’s ongoing war on inflation, and a sharp rise in 10-year Treasury yields have kept rates higher for longer than we all expected.
If you have the goal of buying a home soon, we know the most important question on your mind is: Should I buy a house now, or wait for mortgage rates to go back down?
Let’s put some things into perspective first - it is highly unlikely mortgage rates will fall back to 3% anytime soon, if ever.
When mortgage rates hit a record low of 2.65% in January 2021, it was because the Federal Reserve had artificially pushed them down by purchasing trillions in mortgage-backed securities (MBS) and lowering the fed funds rate to nearly zero.
These lower borrowing costs, combined with the massive amounts of stimulus that were pumped into the economy during the pandemic, are what led to massive inflation and mortgage rates nearly tripling from their record lows.
Long story short, we probably won’t see mortgage rates go back to 3%. But that doesn’t mean they need to stay at 7% either...
At the moment, we are optimistic that 2024 will bring lower mortgage rates and provide some relief for homebuyers. With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle.
Of course, interest rates are notoriously volatile and could tick back up on any given week. However, nearly every economic forecast is predicting lower rates in 2024.
The Mortgage Bankers Association's Mortgage Finance Forecast for September 2023 predicts 30-year fixed mortgage rates will be in the 5% range for most of 2024:
What’s more, they predict that the 30-year fixed will stay low and average 5.1% in 2025.
Fannie Mae also releases a monthly Housing Forecast , and while their September predictions are not as optimistic, they still have 30-year fixed mortgage rates in the 6% range for the entirety of 2024:
Wells Fargo's latest U.S. Economic Outlook puts 30-year fixed rates pulling back to 6.75% in the fourth quarter 0f 2023, and its forecasting group predicts that rates will fall below 6% in the third quarter of 2024. Finally, in their August Real Estate Market Outlook , the National Association of Realtors puts 30-year fixed rates at near 6% by early Spring 2024. As it stands right now, the general consensus is for mortgage rates to be in the 5-6% range for 2024.
Everybody had a prediction going into Summer 2023 that mortgage rates would decrease. Unfortunately, the resilient U.S. economy, the Fed’s ongoing war on inflation, and a sharp rise in 10-year Treasury yields have kept rates higher for longer than we all expected.
If you have the goal of buying a home soon, we know the most important question on your mind is: Should I buy a house now, or wait for mortgage rates to go back down?
Will Mortgage Rates Go Back to 3%?
When mortgage rates hit a record low of 2.65% in January 2021, it was because the Federal Reserve had artificially pushed them down by purchasing trillions in mortgage-backed securities (MBS) and lowering the fed funds rate to nearly zero.
These lower borrowing costs, combined with the massive amounts of stimulus that were pumped into the economy during the pandemic, are what led to massive inflation and mortgage rates nearly tripling from their record lows.
Long story short, we probably won’t see mortgage rates go back to 3%. But that doesn’t mean they need to stay at 7% either...
2024 Mortgage Rate Predictions
Of course, interest rates are notoriously volatile and could tick back up on any given week. However, nearly every economic forecast is predicting lower rates in 2024.
The Mortgage Bankers Association's Mortgage Finance Forecast for September 2023 predicts 30-year fixed mortgage rates will be in the 5% range for most of 2024:
- Q1: 6.1%
- Q2: 5.8%
- Q3: 5.5%
- Q4: 5.4%
What’s more, they predict that the 30-year fixed will stay low and average 5.1% in 2025.
Fannie Mae also releases a monthly Housing Forecast , and while their September predictions are not as optimistic, they still have 30-year fixed mortgage rates in the 6% range for the entirety of 2024:
- Q1: 6.8%
- Q2: 6.6%
- Q3: 6.4%
- Q4: 6.3%
Wells Fargo's latest U.S. Economic Outlook puts 30-year fixed rates pulling back to 6.75% in the fourth quarter 0f 2023, and its forecasting group predicts that rates will fall below 6% in the third quarter of 2024. Finally, in their August Real Estate Market Outlook , the National Association of Realtors puts 30-year fixed rates at near 6% by early Spring 2024. As it stands right now, the general consensus is for mortgage rates to be in the 5-6% range for 2024.
Should You Buy Now Or Wait?
However, if you have met with a mortgage advisor, ran the numbers, and have the room in your budget, you should buy a home now. Housing prices will keep going up like they always have. The home you want is going to be more expensive a year from now. Buying today means you will be able to lock in your home’s price before housing costs increase even more. If interest rates do go down as predicted, you can refinance to a permanently lower rate.
And remember, because interest rates are high right now, fewer people are buying. This means you won’t have as much competition when you make offers, and it's likely you will have some negotiating power to secure a lower price or seller credits to reduce your costs even more.
We understand that everyone’s situation is different. Before making any decisions on your homebuying plans, it’s crucial that you look at the numbers for your specific purchase scenario and financial situation. If you would like to see a Cost of Waiting Analysis for your area, similar to the one shown above, give us a call or fill out the form below to request a consultation with a mortgage advisor.
Here at Luminate Home Loans, we’re always looking for ways to offer more value to our clients and partners. That’s why we’re thrilled to announce that we’re now a wholly owned subsidiary of Luminate Bank®—and soon, we’ll officially transition under the Luminate Bank® name.
For years, homebuyers have been hoping for a return to the ultra-low mortgage rates seen during the pandemic. But as we move through 2025, it’s becoming increasingly clear that today’s rates—hovering between 6% and 8%—aren’t going anywhere.
Luminate Bank® Welcomes Josh Eifert as Chief Financial Officer, Honoring Legacy of Dave Turk [Minneapolis, Minn.] – [2/4/2025] – Luminate Bank® is proud to announce the appointment of Josh Eifert as its new Chief Financial Officer, succeeding Dave Turk, who has played a pivotal role in shaping the company's strong financial foundation. Josh brings a wealth of experience and strategic vision to Luminate Bank, with 26 years in the banking industry. Most recently, Josh served as CFO at Tradition Capital Bank in Edina, Minnesota, where he led the financial strategy during its remarkable growth from $300 million to more than $2.5 billion in total assets. Before his tenure as CFO, Josh contributed to Tradition Capital Bank in other key financial roles. He began his career with Norwest and Wells Fargo Banks, gaining extensive expertise in financial and operational capacities. Luminate Bank's leadership transition reflects the company's thoughtful succession planning, ensuring its financial strategies remain robust and forward focused. Under the leadership of Dave Turk, Luminate Bank has built an exceptional financial infrastructure, delivering consistent results and creating a foundation that positions the company for continued success. Luminate Bank's CEO, Marc Campbell, shared his confidence in the appointment: "Josh not only brings exceptional financial acumen and strategic insight to Luminate Bank, but he also embodies the principles that define our organization: integrity, innovation, and a steadfast commitment to excellence," Luminate Bank's CEO, Marc Campbell, shared with confidence. "His leadership will ensure our financial strategies succeed and inspire confidence across all who depend on us." "I am honored to join Luminate Bank at such an exciting time. The company's remarkable history of financial excellence and its forward-thinking approach align perfectly with my values and vision," stated Josh Eifert. "I look forward to collaborating with the talented leadership team to build on this strong foundation and drive continued success for our customers, employees, and stakeholders." Josh graduated from the University of Minnesota with a degree in finance and completed the Graduate School of Banking at Colorado. CEO Marc Campbell expressed gratitude for retiring CFO Dave Turk's contributions, saying, "Dave has been instrumental in positioning Luminate as a financial leader. His dedication, insight, and stewardship will always be a part of our company's legacy." Josh Eifert will officially assume his role on February 18, 2025. About Luminate Bank® At Luminate Bank, We Open Doors—empowering individuals and families to achieve their financial dreams through personalized service and innovative digital solutions. As a nationwide bank headquartered in Minneapolis, Minnesota, we are committed to helping our clients meet their financial goals with a blend of modern technology, traditional values, and the trusted guidance of experienced professionals. Known for our exceptional commitment to customers, we take pride in delivering a seamless, supportive experience for every step of the journey. Our dedicated mortgage division has branches and a team of loan originators across the US, making expert home financing solutions accessible to communities nationwide. Luminate Bank is committed to safeguarding your money and accounts with FDIC insurance coverage up to applicable limits. Learn more about how we can open doors for you at www.luminate.bank , follow us on Instagram, LinkedIn, and Facebook, or call (952) 939-7200. For media inquiries, please contact: Debbie Schwake, CMO debbie.schwake@luminate.bank
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