Jake Tuff 
Mortgage rates have reached unprecedented highs over the past several years, making home buying difficult for new homebuyers. But experts forecast a reduction in rates before 2024.
Mortgage interest rates typically increase when inflation surges and decrease when the economy slows, so how can buyers prepare? Here are a few suggestions:. 1. Consolidate debt.
1. Interest Rates Will Stay High
As interest rates remain at historic levels, many homebuyers are waiting to buy until interest rates decrease – however this could be costly mistake according to Redfin, where one quarter-point difference on mortgage rate could translate to thousands in savings over its lifecycle.
Experts project that mortgage rates will decrease this year, although its exact timing remains undetermined. A variety of factors will impact their direction – economic and inflation data could have an effect.
Mortgage rates are expected to follow inflation downward this year, according to estimates by both the Mortgage Bankers Association and Fannie Mae. It’s important to keep in mind that mortgage rates fluctuate daily–sometimes hourly–based on market conditions.
An increase in homebuyers entering the market will help ease pressure on mortgage rates and may help slow the increase of home prices, which have become unaffordable to many Americans.
2. Inflation Will Continue to Rise
After an intense year in which mortgage rates spiked and home prices surged, experts believe it likely that housing costs will drop in 2024 – good news for prospective buyers who could save by taking advantage of lower interest rates and an easier home market.
Not everyone agrees on whether mortgage rates will decrease significantly, since this depends on how quickly the Federal Reserve manages inflation. If the economy continues to expand and inflation falls off quickly, mortgage rates could remain at historically low levels for an extended period.
According to Freddie Mac, 30-year mortgage rates averaged 6.63% as of the start of February – significantly better than their peak of 8% set back in October. As inflation remains an ongoing threat, rates could fluctuate throughout 2019. Therefore, it would be prudent to keep checking mortgage rate discounts regularly; should one arise, taking immediate steps could save both on monthly payments and mortgage rate premiums alike.
3. Home Prices Will Continue to Rise
Mortgage rates have steadily been on the rise, leading home prices to surge as well. They’re expected to do so until at least 2024 as supply remains limited and demand remains strong.
However, that does not signal the end of troubled waters in the housing market; several key elements must come together in order to reverse them – including lower mortgage rates.
Most experts currently anticipate mortgage rates to remain below 7% throughout most of 2024, according to Freddie Mac’s calculations, they should fall between 6.6% and 5.9 percent by year’s end; historically speaking, average annual rates have typically fallen within this range 80% of the time.
As mortgage rates recede, this could help increase the supply of homes available for sale; however, in order for this to occur many homeowners who are “rate-locked” will need to decide to sell. Gumbinger notes this is especially applicable to affordable markets like Toledo and Rochester where this decision needs to be made quickly.
4. Home Buyers Will Have to Pay More
Home buyers have had it tough in recent years, with mortgage rates and prices skyrocketing and making owning an affordable home difficult. 2024 could bring relief, however, with predictions of lower mortgage rates and more reasonable home prices making home ownership more attainable than ever.
Mortgage rates have begun their gradual descent, though significant reductions will take some time to come about. According to Freddie Mac’s figures on February 29th, an average 30-year fixed-rate mortgage currently sits at 6.94%.
Mortgage rate decreases depend heavily on inflation continuing to reduce and the Federal Reserve beginning its interest rate cuts as announced last month. Even if they do, however, it could take some time before mortgage rates return to an affordable level; until that happens, prospective homebuyers should focus on saving for down payments and improving credit in order to secure the best mortgage rate possible.
