2024 Mortgage Rate Forecast: Market Trends

2024 Mortgage Rate Forecast: Market Trends

At the close of 2023, housing experts projected a modest improvement in 2024 compared to the previous year, anticipating a decline in mortgage rates in the latter half of the year. Initial enthusiasm for rate cuts was fueled by the Federal Open Market Committee’s prediction of three rate reductions in 2024, with some experts even suggesting the possibility of up to six cuts.

However, recent economic indicators, including stronger-than-expected job growth and persistent inflation, have shifted market sentiment from optimism to pessimism regarding rate cuts. Mortgage rates have surged accordingly, with Freddie Mac’s weekly survey approaching 7% and other sources, such as HousingWire’s Mortgage Rate Center, already exceeding 7.2%. This increase in rates has significant implications for the housing market, particularly in exacerbating affordability challenges for potential buyers and dampening the incentive for some existing homeowners to sell.

The impact of rising rates is already evident, with the Mortgage Bankers Association’s purchase index, representing mortgage applications for single-family home purchases, declining for four consecutive weeks. Moreover, the market yield on 10-year Treasury securities, a benchmark for mortgage rates, has reached its highest level since November of the previous year, indicating an expectation of prolonged high interest rates. This environment has led to challenges for real estate professionals, reflected in declining mortgage applications and home sales, as well as the performance of real estate stocks, which have suffered since the March FOMC meeting and recent economic reports.

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