Mortgage Rates Forecast For 2024: When Will Rates Finally Come Down?

It seems mortgage rates fever has finally broken—at least for now.

After rising to a scorching 7.79% in October—the 2023 high—mortgage rates have cooled markedly in recent weeks amid signs of receding inflation pressures and promising signals from the Federal Reserve.

 The average 30-year fixed mortgage rate dropped a hefty 28 basis points to 6.67% the week ending December 21, according to Freddie Mac. A basis point is one-hundredth of one percentage point.

“The 30-year fixed-rate mortgage remained below 7% for the second week in a row, a welcome downward trend after 17 consecutive weeks above 7%,” said Sam Khater, chief economist at Freddie Mac, in a press statement. 

 Nonetheless, while this promising downward rate trend bodes well for a stalled housing market, experts acknowledge that still-high rates and home prices will continue to create challenging conditions for many buyers and sellers in 2024.
In a widely anticipated move, the Federal Open Market Committee (FOMC) voted to leave the benchmark federal funds rate unchanged after its final meeting of 2023. The federal funds rate is the overnight borrowing rate for commercial banks and credit unions and indirectly influences mortgage rates. 
 This is the third consecutive FOMC meeting that resulted in a rate-hike pause, keeping the benchmark interest rate range between 5.25% and 5.5%.

Though Fed Chairman Jerome Powell reiterated at a post-meeting press conference that inflation is still well above the Fed’s long-term, sustainable 2% target rate, policymakers released updated economic projections with a lower rate range in 2024 that included three cuts by year’s end, implying rate hikes are over for this cycle.

So, what does all this mean for mortgage rates in 2024?

“[M]ortgage rates will continue to ease in 2024 as inflation improves and Fed rate cuts get closer,” said Danielle Hale, chief economist at, in an emailed statement. “Mortgage rates could near 6.5% by the end of the year, a key factor in starting to provide affordability relief to homebuyers.”

Over the past year and a half, mortgage rates have skyrocketed to their highest levels in decades amid the Fed’s aggressive interest rate policy actions to tame inflation. Recently, however, rates have declined steadily as a result of the Fed’s rate-hike pauses and cooling economic data. 

 Refinance activity, sluggish over the past year, is also starting to show signs of life amid declining mortgage rates, according to recent Mortgage Bankers Association data.

Experts believe that once the Fed cuts rates in 2024, refinance volume will increase even more as borrowers who took on high mortgage rates will jump at the chance to lower their monthly costs.

 “If [mortgage] interest rates dropped to even 5.5%, it could result in significant savings for these homeowners, as refinancing at that rate could result in an average monthly payment of $1,917 for them, a reduction of $284 every month,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion, in an emailed statement.

The FOMC meets next on January 30-31 for the first of its eight 2024 meetings.

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