Mortgage Rates Expected to Stay High Through 2024

Aspiring homebuyers hoping for lower mortgage rates might be disappointed, as experts predict rates will stay above 6 percent for the rest of 2024.

The Federal National Mortgage Association, commonly known as Fannie Mae, and the National Association of Realtors (NAR) both expect the 30-year mortgage rate to drop slightly to 6.7 percent by the end of the year. The Mortgage Bankers Association is a bit more optimistic, predicting a 6.6 percent rate. Meanwhile, Freddie Mac, the Federal Home Loan Mortgage Corporation, forecasts a rate of 6.5 percent by year-end. “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 stated in their June Economic, Housing, and Mortgage Market Outlook.

Why Are Mortgage Rates Still High?

Mortgage rates were historically low during the pandemic but spiked due to the Federal Reserve’s aggressive rate hikes. This has led to home sales dropping to their lowest level since 1995. Although rates have decreased slightly from their peak in April and early May, they still hover around 7 percent. As of July 3, the 30-year fixed-rate mortgage was 6.95 percent, up 0.09 from the previous week and 0.14 from the previous year. The 15-year fixed-rate mortgage stands at 6.25 percent.

Market watchers and potential buyers are waiting for the Fed to lower its key interest rate, which would eventually reduce mortgage rates. However, the Fed is focusing on inflation and has been hesitant to make this move. Lawrence Yun, NAR’s chief economist, mentioned 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 with the uncertain outlook for community and regional banks, this spread is unlikely to narrow.

High Costs, But Still Buying

“The mortgage payment for a typical home today is more than double that of homes purchased before 2020,” Yun noted in a recent press release. Despite the high rates and near-record high home prices, some Americans are still buying homes. Melissa Cohn, regional vice president of William Raveis Mortgage, explained that buyers now are often those who have been waiting a long time to make a purchase and are ready to proceed regardless of the high rates. “We’re just not going to wait anymore,” she said.

Others believe it’s a good time to buy because they expect real estate prices to rise when mortgage rates eventually drop. “People 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 added.

Conclusion

While mortgage rates are predicted to stay high throughout 2024, the housing market continues to see activity from determined buyers. If you’re planning to buy a home, it’s essential to stay informed about rate trends and market conditions to make the best decision for your financial situation.

For more updates on mortgage rates and tips for homebuyers, visit eMortgage.com.
Call Jehoshua Shapiro, a Certified Mortgage Advisor @ 707-235-2812 for a free consultation.

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