It’s no secret that mortgage interest rates have pretty much doubled since the pandemic lows of 2022. Many borrowers that are considering a home purchase or refinance, want a better idea of where mortgage rates will settle in 2024. Current conventional 30-year mortgage rates (Fannie Mae and Freddie Mac) are hovering around 6.75% this month, which is a decent improvement compared to the recent months.
Interest rates for high-balance Jumbo loans are typically higher, but the actual rate can vary greatly depending on many factors such as the borrower’s loan amount, down payment, and loan term. Example: A 30-year Jumbo loan at 80% loan to value may only be .25% -.5% higher when compared to a standard conventional loan. However, a lower down payment program like the 5% Jumbo loan will have a higher rate, possibly by .05%-1% or more due to the incurred lender risk.
2024 Mortgage Rate Forecast:
Many of the top mortgage industry experts agree that mortgage rates may have hit their limit in late 2023. Most agree the swift rate increase that came last year should slow down in 2024, and there will even be some rate dips in rates along the way. But overall, the rates should settle close to current levels, and could even decrease a few points as recently suggested by the MBA.
There are many factors that will drive mortgage rates in 2024:
- 40-year high rate of inflation. However, many believe inflation has now peaked.
- Worldwide uncertainty related to multiple wars and stock markets.
- Increases in the Federal Reserve’s fed funds rate? Many believe the rate hikes are finished now and the Fed should pull back up to 2.5% this year.
Short-term and long-term rates:
Short-term rates on things like home equity lines of credit (HELOC) auto loans, etc are typically connected to the federal funds rate and move together. These will continue to rise along with the federal funds rate as the fed is planning for more increases this year.
Long-term rates for 30-year or 15-year mortgages for example are not directly affected when the Fed raises short rates, but will likely continue to increase due to current inflation. Most expect the Treasury 10-year yield to peak around 3.5% sometime this year, before coming back down to near 3.0% by the end of the year. The rise in the 10-year rate will also push up mortgage rates, from the current average of 6.25% for 30-year fixed-rate loans to nearly 7%. 15-year fixed-rate mortgages will rise from 5.5% to around 6.25%.
But again as stated above, it’s very likely we will see short-term decreases in rates along the way. Keep in mind that lenders and banks adjust mortgage rates each day. So if you are in the process of purchasing a home, stay in close contact with your loan advisor to help you decide when to lock in your rate.
Bonus: Learn more about ways to combat higher mortgage rates here.
Have Mortgage Rates Stopped Rising?
The long-term outlook is for mortgage rates to start decreasing in Q1 2024. Inflation has slowed down, and outside of normal daily fluctuations, mortgage rates aren’t expected to increase much this year.
Homebuyers who want to learn more or get a quick rate quote can call us 7 days a week, or just submit the Quick Contact Form on this page.