What will the 30 year mortgage rate be in 2024?
30-year mortgage rates are currently expected to fall to somewhere between 5.9% and 6.1% in 2024. Instead of waiting for rates to drop, homebuyers should consider buying now and refinancing later to avoid increased competition next year.
| Date | Value |
|---|---|
| March 31, 2025 | 3.50% |
| December 31, 2024 | 3.50% |
| September 30, 2024 | 5.75% |
| June 30, 2024 | 5.75% |
But barring any major shocks to the system, most analysts agree that mortgage rates are unlikely to return to 3% in the foreseeable future. Therefore, homebuyers who are waiting for a better deal may be disappointed and miss out on other opportunities in the housing market.
Predicted Range for 2025
Considering these factors, a conservative prediction for 30-year fixed mortgage rates by 2025 could be in the range of 5.5% to 7%.
Mortgage Bankers Association (MBA).
MBA's baseline forecast is for mortgage rates to end 2024 at 6.1% and reach 5.5% at the end of 2025 as Treasury rates decline and the spread narrows.
Many forecasters expect rates to remain well under 7 percent this year. McBride expects them to drop all the way to 5.75 percent by the end of 2024. “Inflation has been coming down — and coming down faster than expected in recent months — which bodes well for mortgage rates,” says McBride.
Most major forecasts expect mortgage rates to go down in 2024, but when they'll start trending back down depends on the path that inflation takes in the coming months.
Though rates have ticked back up a bit recently, they should go down by the end of 2024. For homeowners looking to leverage their home's value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease further.
Shannon Feick, co-owner and co-founder at ASAP Properties, LLC, says he's "confident that the relatively strong economy will likely prevent rates from falling below 6% in 2024, but with inflation cooling, mortgage rates will fall slightly from their current levels."
The good news is that inflation is cooling, and many experts expect interest rates to move in a downward direction in 2024. Then again, a two-point drop would be significant, and even if rates fall, they're not likely to get down to 5% within the next year.
What will mortgage rates be in 2025?
If all goes well, by the time 2025 comes around, we could see mortgage rates closer to 6%, or maybe even lower.
From seven percent in the third quarter of 2023, the average 30-year mortgage rate is projected to reach 5.4 percent in 2026.
Mortgage rates are likely to go down in 2024. Rates have already been declining since the start of August - they are currently at 5.95% for an average 2 year fixed and 5.57% for an average 5 year fix, down from 6.85% and 6.37% respectively. This has been helped by inflation coming down over the last few months to 4.0%.
If the United States were to enter a recession, rest assured, there is a silver lining for clients: during periods of prolonged and significant economic decline, you always see mortgage rates drop.
In particular, the Federal Reserve had been buying billions of dollars of bonds in response to the pandemic's economic pressures. This bond-buying policy is a major influencer of mortgage rates. Between that time and July 2023, the Fed aggressively raised the federal funds rate to fight decades-high inflation.
NAR forecasts that sales will rise by 13 percent in 2024. “Housing sales are expected to increase a bit from this year,” agrees Chen Zhao, who leads the economics team at Redfin. “However,” she qualifies, “we are not expecting sales to increase dramatically, as rates are likely to remain above 6 percent.”
The MBA, a trade group representing the mortgage industry, expects the 30-year rate to fall below 6% in the first quarter of 2025, to 5.9%. MBA expects the spread between the 10-year Treasury yield and 30-year-mortgage rates to “tighten further” by the end of the year, which will push mortgage rates down.
We expect total home sales in 2024 to rise 5.0 percent to 5.00 million units, a slight upgrade from 4.96 million units in our prior forecast. We expect the 30-year fixed mortgage rate to decrease to 5.9 percent by the end of 2024, a tick higher than our prior outlook.
As a result, interest rates — including those on home equity loans — have started to trend downward. As we get further into 2024, though, it's possible home equity loan rates could drop even further.
At its 25 January 2024 meeting, the ECB left its main interest rates unchanged, including the deposit rate at 4.00%. The ECB raised rates by 4.5 percentage points from July 2022 to September 2023.
What is a good mortgage rate?
A “good” mortgage rate is different for everyone. In today's market, a good mortgage interest rate can fall in the mid-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circumstances.
Mortgage rates are going to stay above 6% through 2025, according to estimates from Goldman Sachs. Goldman said the decline in mortgage rates should offer marginal improvements in housing affordability. The average 30-year mortgage rate fell to 6.62% last week after hitting a cycle-high of 7.8%.
| 30 year fixed | 7.28% |
|---|---|
| 15 year fixed | 6.70% |
| 10 year fixed | 6.62% |
| 5/1 ARM | 6.16% |
The predictions made by the various analysts and banks provide insight into what the financial markets anticipate for interest rates over the next few years. Based on recent data, Trading Economics predicts a rise to 5% in 2023 before falling back down to 4.25% in 2024 and 3.25% in 2025.
Some lenders offer a mortgage rate lock once the borrower is preapproved with just the address of a prospective home. Others might wait for the seller to accept the buyer's offer. If you lock in too early, however, you might end up exceeding the expiration date and facing extension fees or a new rate.
