2024 Mortgage Rate Predictions: What to Expect and How to Prepare

A mortgage rate forecast estimates where interest rates may go shortly based on economic factors like inflation and Federal Reserve policies. These predictions can offer insight into whether it’s a good time to lock in a rate for a home purchase or refinance or wait for better rates.

Understanding mortgage rate forecasts gives you a clearer picture of what to expect in the housing market. You can make more informed choices about your mortgage, whether buying, refinancing or planning.

Key Takeaways

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A mortgage rate prediction estimates future interest rates, helping borrowers decide when to lock in a rate or refinance.

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Factors like inflation and Federal Reserve policies heavily influence mortgage rate forecasts.

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Watch for Federal Reserve announcements and bond market trends to anticipate potential mortgage rate movements.

2024 Mortgage Rate Predictions

The mortgage rates forecast for 2024 show some variation, but experts generally expect rates to remain elevated throughout the year. While predictions point to slight declines, economic factors like inflation and Federal Reserve actions will play a big role in determining rates.

  1. 1
    Mortgage Bankers Association (MBA)

    Rates are expected to end 2024 around 6.5%, slightly lower than mid-year peaks, but overall mortgage activity will stay subdued.

  2. 2
    Fannie Mae

    Predicts the 30-year fixed mortgage rate will close 2024 at 6.4% and continue to drop into 2025, potentially reaching 5.9% by year-end.

  3. 3
    Freddie Mac

    Forecasts a gradual drop in rates through 2024, with rates easing as inflation slows. They expect rates to decrease but caution that inflation may still stay above target.

What Is a Mortgage Rate Forecast?

A mortgage rate forecast estimates future interest rate trends based on current economic data and market conditions. These predict how mortgage rates may rise or fall in the coming months, giving borrowers an idea of what to expect when securing a mortgage or refinancing a home loan.

Mortgage rate forecasts are typically created by economists and experts at institutions like the Mortgage Bankers Association (MBA) and government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. These organizations analyze economic factors like inflation, employment and Federal Reserve policy to predict where rates might go. Their forecasts help borrowers and homeowners anticipate potential changes in mortgage costs.

What Factors Go Into a Mortgage Rate Forecast?

Mortgage rates predictions are based on a range of economic and market factors. Experts analyze these indicators to estimate where rates may go, helping borrowers and homeowners understand potential shifts in the housing market.

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    GDP growth

    Strong economic growth can lead to higher mortgage rates as increased demand for loans drives up borrowing costs.

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    Inflation

    Rising inflation typically leads to higher mortgage rates, as lenders increase rates to protect their returns against eroding purchasing power.

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    Employment rates

    A strong job market often leads to higher rates, as more people can afford homes, increasing demand for mortgages.

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    Federal Reserve Policies

    The Fed's decisions on interest rates directly impact mortgage rates, with rate hikes generally pushing mortgage rates higher.

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    Home Sales and Construction Activity

    When home sales and construction rise, it can signal higher demand, which may raise mortgage rates.

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    Real estate supply and demand

    A housing market with limited supply and high demand can lead to higher mortgage rates as competition for homes increases.

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    International Markets and Geopolitical Events

    Global economic shifts, trade relations and political instability can create uncertainty and influence U.S. mortgage rates by impacting investor behavior.

How Are Mortgage Rate Predictions Determined?

Mortgage rate predictions rely heavily on historical data analysis. Experts examine past trends in interest rates, inflation and economic growth to identify patterns that can help predict future rate movements.

In addition to historical data, predictive models and forecasting tools are used. These models, which often incorporate AI and statistical analysis, allow experts to simulate different economic scenarios and estimate how mortgage rates might respond.

How to Use Mortgage Rate Forecasts

Your mortgage rate directly impacts how much you’ll pay over the life of your loan. By using insights from mortgage rates predictions, you can make strategic decisions to minimize costs and optimize your loan, such as:

  • Locking in a Rate: If predictions suggest rates will rise, locking in your current rate can protect you from paying more over time.
  • Refinancing: When forecasts predict a drop in rates, refinancing could lower your monthly payments and save you money on interest over the life of your loan.
  • Waiting Based on Trends: If mortgage rates prediction models show a potential future decline, waiting before purchasing or refinancing could help you secure a lower rate.

While mortgage rate predictions offer valuable insights, remember that forecasts aren’t guaranteed. Economic conditions can change unexpectedly, so balancing the risks of waiting or acting immediately is best. Understanding this uncertainty lets you make more informed choices without relying too heavily on predictions.

Signs to Watch for in Mortgage Rate Movements

While a mortgage rate forecast can be helpful, it’s also smart to watch for signs indicating where rates might be headed. Paying attention to these signals can give you a better sense of upcoming changes.

What to Watch Out For
What It Is
What It Could Mean for Mortgage Rates

Federal Reserve Announcements

Statements about U.S. monetary policy, typically found on the Fed's website or in news reports.

If the Fed raises the federal funds rate, mortgage rates tend to increase as borrowing becomes more expensive. Conversely, rate cuts can lead to lower mortgage rates.

Inflation Reports

Data on inflation, usually released by the Bureau of Labor Statistics (BLS).

Persistent high inflation may push the Fed to raise the federal funds rate, leading to higher mortgage rates as lenders adjust to protect against inflation’s eroding effects.

Bond Market Trends

Changes in the yields of long-term bonds, tracked on financial news sites.

Higher bond yields often indicate rising mortgage rates, as long-term interest rate expectations influence both. Falling bond yields can signal a potential drop in mortgage rates.

Housing Market Activity

Reports on home sales and demand, available from the National Association of Realtors or Census Bureau.

Increased home sales or a surge in demand can increase rates, as lenders may raise rates in response to more competition among buyers.

Geopolitical Events

Major global news or political instability, often covered in the media.

Political or economic instability can cause volatility, leading investors to seek safer assets like bonds. This can lead to lower bond yields and potentially lower mortgage rates.

Expert Insights

Ramsey Coulter, our Credit and Mortgage Expert, has shared his expertise to help clarify what 2024 mortgage rate predictions could mean for you. He answered several questions, offering valuable insight into what homeowners and potential buyers should consider in the coming months.

What do you expect to happen to mortgage rates in the last quarter of 2024?

Ramsey Coulter
Ramsey Coulter:

While I wish I could say rates will be dropping more this year, I believe rates will remain steady where they are at for the rest of the year.

How accurate are mortgage rate forecasts, and should consumers rely on them when making decisions?

Ramsey Coulter
Ramsey Coulter:

Typically the forecasts are pretty accurate. They make the predictions based on many factors described in this article. But the main thing is the historical data and trends. They are usually an indicator of how things will progress.

What should homeowners consider when deciding whether to refinance based on mortgage rate predictions?

Ramsey Coulter
Ramsey Coulter:

They should consider what their current rate is and compare it to current rates. Typically to make sense to refinance you want the rate to be at a minimum of .5% better. While .75% or better lets you know it can be really worth refinancing. If the rate predictions are showing a major decrease in the near future it may be worth waiting a couple more months.

FAQ: Mortgage Rate Predictions

Mortgage rate predictions can be complex, and borrowers often have questions about how they work and what factors influence them. Here are some common questions about mortgage rate movements and how predictions might impact your loan decisions.

What is a mortgage rate forecast?

How often do mortgage rates change?

Should I lock in a mortgage rate now or wait based on predictions?

Do higher mortgage rates mean I can't afford a home?

How do global events affect U.S. mortgage rates?

How can you stay informed about upcoming changes in mortgage rates?

Can mortgage rate predictions change unexpectedly?

About Zachary Romeo, CBCA


Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.


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