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Housing mortgage rates were expected to be lower in 2024 for the housing market, but that hasn’t been the case this year. With inflation still being persistently high, the U.S. Federal Reserve hasn’t cut interest rates so far in 2024, which means home loan mortgage rates have remained high between 6 to 7 percent.
It’s not all doom and gloom. Many experts expect the mortgage rates in the housing market to drop toward the end of 2024 and lower in 2025. The Federal Reserve also might cut rates one time this year.
This Moving Help® article will explore current mortgage rates, what experts are predicting for mortgage rates, the Federal Reserve and whether they’ll cut rates in 2024, the housing market trends, and some ways to figure out whether you should wait or buy a house.
As always, consult with your real estate and loan mortgage experts.
Current Mortgage Rates and Housing Market Overview
House mortgage rates continue to remain in the 6 to 7 percent range. They’ve ranged anywhere from approximately 6.50 percent to 7.25 percent in 2024, according to Freddie Mac.
When the coronavirus pandemic happened, the U.S. Federal Reserve slashed interest rates to as low as 2 to 3 percent. Since 2022, housing mortgage rates have steadily climbed upward.
Why are the rates so high in 2024?
One reason they’re high is because of inflation. The inflation rate increased about 3 percent in 2024, which is higher than the Federal Reserve’s target inflation rate of 2 percent. Because of this, the Federal Reserve has held steady with interest rates.
Many experts thought the Federal Reserve would cut rates up to three times in 2024, but they’ve haven’t yet.
Predictions for Housing Mortgage Rates
While current mortgage rates are high for potential home buyers, buyers might see some relief later in 2024 and in 2025.
End of 2024 Forecast
Many experts expect the housing mortgage rates to drop a little bit by the end of 2024. The following experts expect the mortgage rate housing market to be at the end of the year:
- Freddie Mac: Stay above 6.5 percent
- Fannie Mae: 6.7 percent
- National Association of Realtors: 6.7 percent
- Mortgage Bankers Association: 6.6 percent
- Realtor.com: 6.5 percent
- Wells Fargo: 6.5 percent
Outlook for 2025
Most experts also expect housing mortgage rates to drop in 2025 as well. Most expect inflation to cool off along with the Federal Reserve to continue to cut interest rates. This will help lower mortgage rates for the housing market.
The following predictions from the experts for 2025 include:
- Freddie Mac: Below 6.5 percent on average
- Fannie Mae: 6.5 percent on average
- National Association of Realtors: 6.4 percent on average
- Mortgage Bankers Association: 6 percent at year-end rate
- Wells Fargo: 6.09 percent on average
If you’re interested in getting a lower rate, so you can have a lower monthly payment, you might want to consider waiting based on these expert predictions.
U.S. Federal Reserve and Interest Rates
Heading into 2024, many experts expected the Federal Reserve to cut interest rates at least three times. The economy is slowing down a bit, the labor market has been a bit weakened, and inflation has still been persistent.
Because of these factors, the Federal Reserve hasn’t slashed interest rates once so far in 2024.
Some experts think the Federal Reserve will cut interest rates at least one time in 2024. A couple think interest rates will be cut maybe two times in 2024. If a cut does occur in 2024, it’ll most likely happen at the Federal Reserve’s December’s meeting. The earliest it would happen would be at the Federal Reserve’s September meeting.
While the Federal Reserve doesn’t set mortgage rates, mortgage lenders follow their lead.
If the Federal Reserve does cut rates, more potential homebuyers could get a loan and buy a home. Otherwise, if the rates stay the same, fewer buyers will be in the market to buy a house.
Housing Market Trends
Besides house mortgage rates, homes themselves have been trending upward. We’ll discuss how the rising housing prices and the U.S. housing shortage has been put a damper on potential buyers.
Rising Housing Prices
Housing prices rose in 2024. Housing prices will continue to rise into 2025. For example, May’s median of $419,300 is the highest price ever recorded by the National Association of Realtors.
U.S. Housing Shortage
The other main factor that’s causing home prices to rise is a housing shortage in the United States. The total housing inventory has increased to a 3.2 to 3.8 months’ supply.
That number isn’t high enough, however.
Most experts say a balanced housing market is around four to six months. Anything less than four to six months is considered a seller’s market, and anything more than four to six month is considered a buyer’s market.
Additionally, many homebuyers bought a new home or refinanced their house during the pandemic to get super low interest rates.
This means many potential sellers chose to stay in their home rather than sell, so they didn’t have to give up their low mortgage rates. This component also has assisted in housing shortage.
Understanding the Housing Mortgage Rates
Usually, a normal house mortgage rate would be between 4 to 5 percent, which would help the house market and get back to the 2014-2019 levels. Many experts believe it’ll be a while before the housing market reaches that level again.
If you’re wondering whether mortgage rates will ever be 3 percent again, the answer is likely no. An economic crisis, like the previous pandemic, would need to happen to reach those historic levels.
Just keep in mind, current interest rates aren’t the highest they’ve ever been in the United States. The 1980s holds that spot for the highest interest rates.
Making a Personal Decision: To Buy or Not to Buy
Whether to buy now or to wait to see whether the current house mortgage rates will get lower in the future is a personal decision. If you found the perfect house and can get a decent monthly payment, you might want to consider buying a house.
If you don’t want to buy a house now, you can focus on saving money, saving for a larger down payment, which would help lower monthly payment, and improve your credit score. These factors will help you when buying a house at the right time for you.
As always, consult with your real estate experts, mortgage lender experts, and anyone else who’ll assist you in your journey. You also can use an online mortgage calculator as well.
Housing Mortgage Rates Remain High in 2024
Mortgage rates in the housing market stayed higher than most experts expected in 2024. Potential home buyers could see some relief at the end of 2024 and in 2025 with interest rates likely to decrease.
The Federal Reserve could help lower interest rates by cutting rates at the group’s December meeting. Housing prices have increased along with a housing shortage that has hurt potential home buyers from finding their dream home.
Finally, buying a house is a personal decision for each individual and family. As always, consult with your real estate and loan mortgage experts first.
