Mortgage warning as experts give their verdict on when interest rates will fall (2024)

FAQs

Are interest rates for mortgages expected to go down? ›

The general consensus among industry professionals is that mortgage rates will slowly decline in the last quarter of 2024. The projected declines have shrunk, though, in recent months. At the start of the year, for instance, Fannie Mae predicted rates would drop to 5.8%.

If you wait for rates to fall, you could face higher home prices or miss out on your dream home. Rather than waiting for rates to fall, it may be a wise choice to purchase your home now and consider refinancing later.

Mortgage rate prediction FAQs

Mortgage rates could fall in 2024, but that's not a given. The Mortgage Bankers Association projects a 6.5% rate by the end of the year, while Fannie Mae predicts 2024 will end with rates at 7%.

Key Takeaways

Those who are waiting for mortgage rates to drop before buying a house will likely be on the sidelines while home prices continue to appreciate, and falling rates could push prices even higher.

Tracker mortgage repayments are usually tied to the base rate plus a certain percentage. So, if the base rate rises by 0.25% for example, your repayments will increase by this amount. If the base rate goes down, you could pay less.

Economists and housing market experts agree that mortgage rates will fall over the next several years, but not below 3%.

Mortgage rates are expected to come down in 2024, and inventory and home sales are likely to increase. Homebuyers and sellers can also expect prices to continue to rise, albeit at a slower clip than the past couple of years.

Prediction of Mortgage Rates for 2025

Keep in mind that inflation is still a factor, and mortgage rates may continue to hover around 6%. Here are some predictions for 2025 from key players and industry associations in the mortgage space: Fannie Mae: 6.1% Mortgage Bankers Association: 5.9%

Locking in early can help you get what you were budgeting for from the start. As long as you close before your rate lock expires, any increase in rates won't affect you. The ideal time to lock your mortgage rate is when interest rates are at their lowest, but this is hard to predict — even for the experts.

The consensus among these experts suggests the Federal Reserve is likely to keep the federal funds rate where it is, but it could lower rates later in the year. Consequently, mortgage rates are likely to stay in the current 7% range, with little room to drop much lower, at least in the near future, experts say.

Should I wait for interest to go down? ›

If you wait until a rate cut, a lower interest rate on a higher total mortgage debt might cost you more than a higher rate on a lower value mortgage. This is why smart investors don't wait for low interest rates or try to time when property prices will drop.

When is a good time to wait? Rising mortgage interest rates often mean a smaller pool of buyers who can afford the price you want. Selling a home isn't free, so if you can't maximize your price, you might want to wait. If you recently refinanced your mortgage, it may not make financial sense to sell just yet.

The 10-year treasury constant maturity rate in the U.S. is forecast to decline by 0.8 percent by 2026, while the 30-year fixed mortgage rate is expected to fall by 1.6 percent. From seven percent in the third quarter of 2023, the average 30-year mortgage rate is projected to reach 5.4 percent in 2026.

The Federal Reserve slows inflation by raising the federal funds rate, which can indirectly impact mortgages. High inflation and investor expectations of more Fed rate hikes can push mortgage rates up. If investors believe the Fed may cut rates and inflation is decelerating, mortgage rates will typically trend down.

Of course, this is just one possible outcome of a housing market crash; another possibility is that interest rates could go down. This would happen if the demand for loans decreases at the same time that the supply of money available to lend increases.