Mortgage Rates on the Decline: What Homebuyers Should Know

Mortgage rates have been a significant factor impacting housing affordability in recent years. However, there's positive news on the horizon: rates have begun to decrease. According to Freddie Mac (see graph below), they recently reached their lowest point in 2024.

For homebuyers considering a purchase, a key question emerges: how much further will rates decline? Here's what you can expect:

Expert Forecasts for Mortgage Rates

Experts anticipate the overall downward trend to continue, contingent on a cooling inflation rate and a stabilized economy. However, new reports on these indicators may cause some short-term volatility.

It's crucial to remember that these fluctuations shouldn't overshadow the larger trend. Rates are currently down roughly a full percentage point compared to their peak in May.

The consensus suggests rates could reach the low 6% range in the coming months, depending on economic developments and future Federal Reserve actions. Many experts are already revising their 2024 forecasts to reflect a more optimistic outlook for lower rates.

For instance, Realtor.com forecasts have been adjusted downward:

"Mortgage rates have been revised slightly lower as economic signals suggest the Fed may begin reducing rates in 2024. Our yearly forecast for average mortgage rates is now 6.7%, and our year-end forecast has been revised from 6.5% to 6.3%."

Determining Your Mortgage Rate Threshold

What does this information mean for your buying plans? If you've been waiting for rates to decrease, the good news is the decline has already begun. By considering expert projections and your budget, you can determine the ideal entry point for your home search.

As Freddie Mac's Chief Economist, Sam Khater, emphasizes:

"The decline in mortgage rates increases prospective homebuyers' purchasing power and should stimulate their interest in entering the market."

Here's a valuable step: identify your comfort zone for mortgage rates. This could be 6.25%, 6.0%, or even lower. Having a target rate allows you to avoid getting bogged down in daily rate fluctuations.

Bottom Line

Instead of constantly monitoring rates, let’s connect.  I can provide ongoing market updates and collaborate with you on determining the most opportune time to make your move. Once rates reach your target range, I'll be ready to help you find home selling and buying success.