Question: Where do you expect interest rates to go in 2024?
Answer: The thing about interest rate forecasts is that they’re almost always wrong, so keep that in mind as you digest the predictions in this article or anywhere you hear/read them.
For the most part, buyers have adjusted to interest rates being about double what they were two years ago. Few remaining buyers in the market were active when rates were that low so rates in the 6-8% range are all most current buyers are used to seeing. Thus when rates dropped about 1-1.5% towards the end of 2023, it created strong momentum in the market and we’re seeing that early this year with loan applications up and a high volume of showings and competing offers.
What is a “Normal” Mortgage Rate?
The first thing to understand about mortgage interest rates is that they are market-driven and forecasting comes with the same amount of unpredictability as any other economic/market-based forecasting (GDP, Unemployment, Stocks, etc). Take predictions/forecasts with a grain of salt.
The other truth that is best illustrated by the chart below, which shows the average 30-year fixed mortgage rate since 1971, is that there is no established “normal” interest rate that we can point to and say “This is what you can expect when markets stabilize.” So, use caution when relying on assumptions about future rates (e.g. for a refi).
Forecasting Future Rates
Most major forecasting organizations including the Mortgage Bankers Association, Freddie Mac, and the National Association of REALTORS® (NAR) believe rates will steadily decrease through 2024 and that trend will continue into 2025 (although I wrote the same thing last year and rates trended up for most of the year).
The National Association of REALTORS® expects the average 30yr fixed rate will average 6.3% in 2024
Mortgage Bankers Association expects rates to fall faster than Fannie Mae and NAR, with average 30-year fixed rates hitting 6.1% by the end of the year and mid-5s by the second half of 2025.
Fannie Mae sees rates not moving too much and averaging 6.9% in 2024,
Higher Loan Limits for Lower Down Payments
The Federal Housing Finance Agency (FHFA) just released new conforming loan limits for 2024, with significant increases to reflect recent price growth. The jurisdictions in the greater DC Metro area were given the maximum loan ceiling of $1,149,825. Beginning this year, Fannie/Freddie will insure loans up to $1,149,825 with as little as 5% down, or the equivalent of a purchase price of just over $1,210,000 with 5% down. The new conforming limits increase the maximum loan amount by 3% down to $766,500, or the equivalent of a purchase price of just under $790,000 with 3% down.
For any conforming loan (or any loan for that matter), borrowers must also qualify on several factors including credit score, debt-to-income ratio, first-time buyer status, and more. Feel free to reach out to me for lender recommendations if you’d like to explore your mortgage options.
If you’d like to discuss your mortgage qualifications or available loan products/programs, you can reach out to Jake Ryon with First Home Mortgage at [email protected].
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Real Estate Agent in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.
