Mortgage Forecasters Predict Rates at End of 2024

US News Reporter

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Aspiring homebuyers waiting for mortgage rates to finally fall are unlikely to see much of a change any time soon, according to experts, as forecasts expect rates to remain well above the 6 percent mark by the end of 2024.

The Federal National Mortgage Association, better known as Fannie Mae, and the National Association of Realtors (NAR) both expect the average 30-year mortgage rate to modestly lower to 6.7 percent by the end of the year. The Mortgage Bankers Association is slightly more optimistic, expecting it to be 6.6 percent by the same time.

For the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, the rate will lower to 6.5 percent by the end of 2024. "Mortgage rates have been volatile over the past month, but we expect rates to remain above 6.5 percent through the end of the year," Freddie Mac wrote in its June Economic, Housing and Mortgage Market Outlook.

Rows of Homes California — Construction workers help build a mixed-use apartment complex that will hold over 700 units of apartment housing and 95,000 square feet of commercial space on January 25, 2024, in Los Angeles, California. Most experts predict... Mario Tama/Getty Images

Mortgage rates, which had remained historically low during the pandemic, have spiked following the Federal Reserve's aggressive rate-hiking campaign, leading to home sales plunging to their lowest level since 1995 last year.

Though mortgage rates fell compared to the highs seen in April and early May (over 7 percent for the average 30-year fixed), they still hover around the 7 percent mark. As of July 3, the 30-year fixed-rate mortgage was 6.95 percent, according to Freddie Mac, up 0.09 from a week earlier and 0.14 from a year earlier. The 15-year fixed-rate mortgage was 6.25 percent.

Market observers and homebuyers are waiting for the central bank to finally lower its key interest rate, a move that would eventually have the effect of lowering mortgage rates too. But as it continues to pay close attention to inflation, the Fed has so far been reluctant to make such a move.

Lawrence Yun, NAR chief economist, told Bankrate that "if the spread between the 10-year Treasury bond yield and the 30-year mortgage rate narrows, then mortgage rates can decline even before the Federal Reserve's rate cut."

"But given the uncertain outlook for community and regional banks, the spread is not likely to narrow," he said.

"The mortgage payment for a typical home today is more than double that of homes purchased before 2020," Yun wrote in a recent press release shared with Newsweek. "Still, first-time buyers in the market understand the long-term benefits of owning."

Despite stubbornly high mortgage rates and average home prices close to their pandemic record peaks, there are still Americans buying homes.

Melissa Cohn, the regional vice president of William Raveis Mortgage, told Newsweek that those buying during these unlikely times are people who have waited a long time to buy, and are ready to make a purchase. "We're just not going to wait anymore," she said.

But some others think this is the right time to buy; these are "people who think that you want to take advantage of where real estate prices are today because when mortgage rates come down, real estate prices will go up," Cohn said.