Will interest rates go down in 2024?
“[D]uring the early part of the year, expect some bumpiness in rates as new economic data are released and as more buyers get back into the market. However, the overall outlook for mortgage rates in 2024 suggests more rate drops, with Bright MLS forecasts predicting rates to hit 6.2% by the fourth quarter.”
After its December 2023 meeting, the Federal Open Market Committee (FOMC) predicted making three quarter-point cuts by the end of 2024 to lower the federal funds rate to 4.6%.
One reason is that as the Federal Reserve presumably begins to cut rates, the bond market is expected to become less volatile, leading to a slight decline in mortgage rates. The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.
The Federal Reserve (Fed) announced at its March 2024 meeting that it would maintain the overnight federal funds rate at the current range of 5.25% to 5.5%.
Most economists, including Zandi, expect interest rates to fall fairly significantly in 2024 and 2025. Zandi is forecasting that the Federal Reserve will cut short-term interest rates four times in 2024 — a quarter-point each time. He expects another four rate cuts in 2025 and two more in 2026.
The median estimate for the fed-funds rate target range at the end of 2025 moved to 3.75% to 4%, from 3.5% to 3.75% in December.
ING's interest rate predictions indicate 2024 rates starting at 4%, with subsequent cuts to 3.75% in the second quarter. Then, 3.5% in the third, and 3.25% in the final quarter of 2024. In 2025, ING predicts a further decline to 3%.
It's possible that rates will one day go back down to 3%, though if current trends hold that's not likely to happen anytime soon.
Mortgage rates to stay above 6% through 2025, Fannie Mae says.
Driving the news: The median Fed official now expects interest rates to be somewhat higher in 2025 and 2026 than they did in December — anticipating fewer rate cuts will be justified in the coming two years. The median projection for the longer-run rate also ticked up, to 2.6% from 2.5%.
How many rate cuts in 2024?
While officials affirmed their view for three rate cuts this year even as they upgraded the economic outlook, they trimmed the number of cuts expected next year from four to three for a slightly shallower pace of easing - a stance one analyst characterized as "bullish-dovish."
Eight meeting dates in 2024
The Federal Open Market Committee, or FOMC, is the arm of the Federal Reserve responsible for setting monetary policy. It typically meets eight times per year.
RBI MPC Meeting 2024 Live: MPC votes by a 5:1 majority to maintain status quo on rates. The RBI's Monetary Policy Committee (MPC) voted by a 5:1 majority to keep key rates unchanged at 6.5%. The policy stance is also maintained at 'withdrawal of accommodation', said RBI Governor Shaktikanta Das.
| Month | Average 30-Year Fixed Rate |
|---|---|
| January 2024 | 6.64% |
| February 2024 | 6.78% |
| March 2024 | 6.82% |
| April 2024 | 6.99% |
Key takeaways. Your credit card APR can go up if the prime rate changes, you paid your credit card bill late, your intro APR offer ended or your credit score dropped. If your APR increases, you can work on paying down your balance or transfer your balance to a card with a low or 0 percent intro APR offer.
| Category | Latest Average | Q1 2024 |
|---|---|---|
| All New Offers | 22.85% | 22.89% |
| Excellent Credit | 18.04% | 18.04% |
| Good Credit | 24.09% | 24.12% |
| Fair Credit | 26.32% | 26.41% |
The nation's top economists say the Fed is most likely to keep interest rates higher than 2.5 percent — often considered the “goldilocks,” not-too-tight, not-too-loose level for its benchmark federal funds rate — until the end of 2026, Bankrate's quarterly economists' poll found.
The average 30-year fixed mortgage rate as of Friday is 6.91%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.
What to expect from mortgage rates in 2024. Mortgage forecasters base their projections on different data, but most housing market experts predict rates will move toward 6% by the end of 2024. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates.
Mortgage rates are expected to decline later this year as the U.S. economy weakens, inflation slows and the Federal Reserve cuts interest rates. The 30-year fixed mortgage rate is expected to fall to the mid- to low-6% range through the end of 2024, potentially dipping into high-5% territory by early 2025.
Should I fix my interest rate for 5 years?
Choosing a five-year fixed mortgage rate can improve your chances of passing a lender's affordability checks. Banks often use a more lenient calculation when working out if you can afford the annual or monthly repayments on a five-year remortgage deal.
Futures indicate that short-term interest rates will bottom out at about 3.75% in 2027, while the median forecast among members of the policy-making Federal Open Market Committee is 2.6% — more than 100 basis points lower.
Here's where three experts predict mortgage rates are heading: Around 6% or below by Q1 2025: "Rates hit 8% towards the end of last year, and right now we are seeing rates closer to 6.875%," says Haymore. "By the first quarter of 2025, mortgage rates could potentially fall below the 6% threshold, or maybe even lower."
Mortgage giant Fannie Mae likewise raised its outlook, now expecting 30-year mortgage rates to be at 6.4 percent by the end of 2024, compared to an earlier forecast of 5.8 percent.
Current FHA loan rates. Since the pandemic, rates on FHA loans have bounced around — from less than 3 percent during the pandemic to 8 percent in October 2023. For most of early 2024, FHA mortgage rates have hovered around 7 percent.
