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  • Writer's picturecdellarosa

Mortgage Rate Forecast for the Remainder of 2024

The 2nd most popular question I'm asked almost daily (just behind "how's the market?) is "where do you expect mortgage interest rates to go"? So, here is a pretty comprehensive forecast for Housing Mortgage Rates for the remainder of 2024.

Mortgage rates continue their dizzying roller coaster ride. After hitting a 2024 high of 7.22% to start May, the average 30-year fixed mortgage rate broke under 7%, popped back over 7% at the end of May, resumed its downward trajectory in June and has now risen again. The average rate on the benchmark 30-year mortgage increased by nine basis points, ascending to 6.95% the week ending July 3, according to Freddie Mac data. A basis point is one one-hundredth of a percentage point. Despite mortgage rates remaining elevated and fluctuating within a relatively narrow range over the past few months, many housing market experts expect rates to recede slightly in the coming months, assuming the Federal Reserve finally implements cuts to its benchmark interest rate.

Mortgage Rate Predictions for 2024

Here is how some experts predict market conditions will affect the average 30-year, fixed-rate mortgage in Q3 2024 and beyond:

Freddie Mac: Rates will remain elevated through most of 2024.

In its June Economic, Housing and Mortgage Market Outlook forecast, Freddie Mac anticipates that the central bank will approve one rate cut later this year. While this should prompt a gradual easing of mortgage rates, the mortgage giant expects mortgage rates to remain above 6.5% through the end of the year.

Fannie Mae: Rates will average 6.8% in Q3

Fannie Mae revised its anticipated average 30-year fixed mortgage rate for Q3 between its May and June housing forecasts, now projecting an average rate of 6.8%, down from 7.1%. The June forecast also predicts that mortgage rates will average 6.8% in 2024, down from 7% in its previous forecast. As for 2025, Fannie Mae expects mortgage rates to average 6.7%.

National Association of Realtors (NAR): Rates will average 6.9% in Q3

NAR expects the 30-year fixed mortgage rate to average 6.9% in its most recent quarterly forecast published in June, an increase from its previous forecast of 6.7%. The professional real estate organization also revised its forecast upward for Q4 to 6.5% to 6.7% by the end of 2024.

“In the second half of 2024, look for moderately lower mortgage rates, higher home sales and stabilizing home prices,” said chief economist Lawrence Yun, in a June press statement.

Mortgage Bankers Association (MBA): Rates will decline to 6.8% in Q3

MBA expects the 30-year fixed-rate mortgage to decline throughout the year, averaging 6.8% in Q3, according to its June Mortgage Finance Forecast. The MBA had predicted an average Q3 mortgage rate of 6.7% in its May forecast. MBA economists anticipate that the Fed will implement two rate cuts before the end of the year, with the average mortgage rate landing at 6.6% by the end of 2024.

Bank of America: Rates will decline below 7%

“Bank of America global economists now anticipate the first rate cut in December,” says head of retail lending Matt Vernon. “While there’s still optimism that mortgage rates will eventually drop below 7% in the coming months, inflationary pressures are currently keeping them elevated.”

Palisades Group: Rates will stay above 6.25% through 2024

“The market has consistently overestimated the likelihood, timing, and quantity of the Federal Reserve’s rate cuts,” says managing member and chief investment officer Jack Macdowell. “Based on current data, it is hard to envision more than one to two cuts in 2024 and hard to see mortgage rates drop below 6.25%.”

The long and short of it:

If you are holding out for a dramatic drop in rates in 2024 you will likely be disappointed. Expect a small decline, which may be just enough to stimulate the market enough to benefit both buyers and sellers. After all, the present higher rates and lower inventory have hurt both buyers and sellers. The likelihood of another small rate drop should be just what the market needs.

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