2024 Mortgage Rate Predictions by Experts

Mortgage Rate Outlook for 2024: Expert Predictions and Fed's Impact

As we look ahead to the mortgage rate landscape in 2024, various experts and industry leaders have shared their predictions on how market conditions will shape the average 30-year, fixed-rate mortgage. While opinions vary, most anticipate rates to remain above 6% for a significant portion of the year.

Freddie Mac expects rates to stay above 6.5% through the current quarter, while Fannie Mae's Housing Forecast has been revised slightly downward, projecting an average rate of 6.6% in 2024 and 6.1% in 2025. Lawrence Yun, chief economist at the National Association of Realtors, points to the high budget deficit and inflation metrics as reasons for rates likely remaining in the 6% to 7% range for most of the year.

The Mortgage Bankers Association (MBA) forecasts the 30-year fixed-rate mortgage to average 6.7% in Q2 and end 2024 at 6.4%. Bank of America's head of retail lending, Matt Vernon, notes that initial hopes for multiple rate cuts have shifted due to the U.S. economy's resilience, with the first rate cut now anticipated in December.

Dr. Lisa Sturtevant, chief economist at Bright MLS, expects some fluctuations in rates early in the year as new economic data emerges and more buyers enter the market. However, she predicts an overall outlook of rate drops, with rates potentially hitting 6.2% by the fourth quarter.

Yelena Maleyev, senior economist at KPMG Economics, highlights the challenges posed by persistent inflationary pressures in the services sector, which have made the Federal Reserve's goal of reaching a 2% target more difficult. She suggests that the bulk of rate declines will occur in 2025, with mortgage rates possibly remaining close to 7% during the spring home-buying season.

Jack Macdowell, managing member and chief investment officer at Palisades Group, believes the market has consistently overestimated the likelihood, timing, and quantity of the Federal Reserve's rate cuts. Based on current data, he finds it challenging to envision more than one to two cuts in 2024 and for mortgage rates to drop below 6.25%.

The Federal Reserve's recent decision to hold rates steady between 5.25% and 5.5% for the sixth consecutive meeting has also impacted mortgage rate projections. Despite predictions of rate cuts in 2024, mortgage rates have surged due to signals that the Fed may need to maintain higher rates for longer to combat inflation.

Danielle Hale, chief economist at Realtor.com, believes that more evidence of slowing inflation is needed for mortgage rates to drop significantly, potentially setting the stage for a late summer or early fall adjustment. Melissa Cohn, regional vice president of William Raveis Mortgage, is less optimistic, suggesting that rate cuts may not occur until 2025.

For those looking to buy a home, Cohn advises against waiting, as buyers can still come out ahead even with temporarily higher mortgage payments. Hale suggests that buyers can secure lower rates by comparing lenders or considering homes with assumable mortgages.

As the next FOMC meeting approaches on June 11 and 12, the mortgage industry will closely watch for any shifts in the Fed's stance and its potential impact on mortgage rates in the coming months and years.