Mortgage rates forecast for 2024

1 min readLast updated January 24, 2024by Rachel Carey

Discover why mortgage rates are currently so high, what the 2024 mortgage rate predictions are, and how they will impact your financial position.

Summary 

  • Mortgage rates reached a 20-year high in 2023 due to increased credit rates and other factors. 

  • Experts anticipate a modest decrease in mortgage rates in 2024 and 2025. 

  • US housing prices will likely decrease in late 2024. 

  • There are various pros and cons to waiting for more favorable rates before buying. 

  • If you’re considering buying a property, it’s worth speaking to a financial advisor before you take the plunge.    

Why are mortgage rates so high? 

In 2023, US mortgage rates ballooned. From just 3.22% in January to nearly 8% by October, these rates reached their highest levels in over two decades. Getting mortgage preapproval early can help you lock in a rate if they start to rise again.

In December 2023, mortgage rates remain stubbornly high despite a marginal drop to just under 7%. This, combined with a surge in home prices, is making it especially difficult for first-time buyers to enter the US housing market. 

To understand why US mortgage rates are so high at the moment, you need to understand what determines these rates. 

In the US, as in all countries, numerous economic factors influence mortgage rates. Among these, interest rates and inflation are particularly significant. The Federal Reserve Bank (the Fed) increases the interest rate to curb inflation.  

Persistently elevated inflation in 2023 has profoundly impacted mortgage rates in the United States. It has prompted the Fed to maintain high-interest rates for an extended period of time, and mortgage rates have increased concurrently. 

Mortgage rate predictions for 2024: How will rates change? 

Fortunately, the Fed’s increase in interest rates is yielding a downward turn in inflation. This should lead to a steady decrease in interest rates and, ultimately, mortgage rates over the coming year. 

While opinions vary in terms of the forecast for mortgage rates in 2024, the general consensus among commentators and rating agencies is that rates will fall, but not by much. Per a recently released 2024 national housing forecast by Realtor.com, the average mortgage rate next year will be 6.8%, dipping to 6.5% by year-end.  

Will mortgage rates go down in 2024? 

The knock-on effect of increased interest rates leads to decreased inflation and, therefore, decreased interest rates. This bodes well for mortgage rates in 2024. However, while a decrease in US mortgage rates is expected over the coming year, the decline will be modest. 

During the pandemic, homebuyers enjoyed mortgage rates of 3% and lower. You should not be holding out for that sort of windfall in 2024. Rather, you can expect to see rates decrease from roughly 7% to somewhere between 6% and 6.5%. 

Are US housing prices expected to rise? 

According to the Realtor.com forecast mentioned above, US housing prices will likely ease somewhat throughout 2024. The forecast predicts that lowering inflation in 2024, combined with average income growth, will ensure that prospective homebuyers can anticipate an average decrease of 1.7% in US housing prices.  

If you plan to purchase a home in 2024, it’s best to consult a financial advisor to ensure you make the right decision. 

How long are mortgage rates expected to stay high? 

The good news from various mortgage rate forecasts is that mortgage rates may have reached their peak for the foreseeable future. Predictions for Quarter 4 of 2025 range from 5.5% to 6.9% – not as low as previous years, but still promising. 

The following table outlines some of the biggest US financial institution’s predictions: 

Mortgage Rate Predictions: 2024 and 20252024 Forecast2025 Forecast
Fannie Mae 7.30% 6.90%
Goldman Sachs 7.1%* 6.6%*
Mortgage Bankers Association 6.1%* 5.5%*
National Association of Home Builders 7.04% 5.81%
National Association of Realtors 6.30%
Realtor.com 6.8% (6.5%*)
Wells Fargo 6.59% 5.81%

Source: U.S. News

Should I wait for mortgage rates to drop? 

There is no right or wrong answer to this question. There are numerous factors, including your own financial situation, to consider regarding the housing market in the US. 

While waiting may help you enter the market at a more affordable rate, there’s no telling how the economy may shift. Also, with lower rates come increased competition and potentially an increase in US housing prices. Getting mortgage preapproval ahead of time can help you act quickly when you find the right home.

Want to learn more about mortgages? 

Understanding why mortgage rates are so high and how they may change is essential for potential and current homeowners. The more aware people are about the state of the housing market in the US, the easier it will be to determine whether to buy now or wait for more favorable rates in the future. 

If you are in the market to buy or refinance, it’s highly recommended that you seek expert financial advice. Unbiased can match you with an SEC-regulated financial advisor so that you can learn more about mortgages and get the advice you need.  

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.