Most major forecasts expect rates to fall in 2024. But exactly when will mortgage rates go down? Here's how a few of the leading players stack up in their predictions by Q4:
Mortgage Bankers Association
6.1%
Fannie Mae
6.7%
National Association of Realtors
6.0%
Fannie Mae's forecast suggests that 30-year mortgage rates will fall into the 6.7% to 7.1% range in 2024, while NAR believes rates will stick closer to 6%. The MBA forecast predicts that 30-year mortgage rates will drop to 6.1% by the end of 2024.
While there's some dispute on exactly how much rates will go down, the general consensus is that mortgage rates should finally drop back below 7% in 2024.
Should I wait for mortgage rates to drop before buying a house?
With mortgage rates at the highest level they've been in over 20 years, some hopeful homebuyers have decided to wait for lower rates to start shopping for homes. But that's not necessarily the best strategy, as there are some advantages to buying right now.
At the moment, the vast majority of borrowers have rates that are much lower than current rates. According to a Redfin analysis of Federal Housing Finance Agency data, over 90% of homeowners have a mortgage rate below 6%. Many have rates that are even lower; 62% have a rate below 4%.
High rates have kept many of these homeowners from selling, since they don't want to give up their current rates. While this has severely limited inventory, the lack of additional buyers on the market has also kept prices moderate.
"While buyers may have a lower rate in 2024, there will be more buyer competition next year, which will drive prices higher," says Karen Kostiw, a real estate agent with Coldwell Banker Warburg in New York City. "Buyers should grab a deal now at a lower price and refinance next year if rates do fall."
Saburi agrees that buying now and refinancing later is a good strategy for buyers who want to avoid competition and the higher home prices that will likely come with it.
"Would-be buyers that have the ability to buy can avoid a potentially competitive market by locking in a purchase now and taking advantage of a refinance in the future," Saburi says.
A mortgage refinance replaces your existing mortgage with a new mortgage, often with the goal of getting a lower rate or lower monthly payment. If you can afford to buy a house now, you could avoid a tough housing market next year and have the opportunity to lower your housing costs with a refinance once rates fall. Just be sure to shop around and get quotes from multiple mortgage refinance lenders to be sure you're getting the best rate.