With the Fed holding off on rate cuts, experts predict mortgage rates to stay above 6% in 2024. Here’s what this means for homebuyers.
Homebuyers hoping for a significant drop in mortgage rates this year might be disappointed. While the Federal Reserve’s decision to hold rates steady with potential cuts later in 2024 might seem like positive news, experts say it’s unlikely to translate to substantial mortgage rate relief.
“The housing market has already priced in this expectation,” says by the financial experts of thecardpedia.
“Those dreaming of rates below 6% may need to adjust their expectations. The current reality is that rates are likely to stay in the 6% to 7% range for most of 2024.”
As of today, the average 30-year fixed mortgage rate sits at a hefty 6.9%. Forecasts suggest these rates might not dip below 6% before the end of the year.
“There’s not likely to be a dramatic decrease in mortgage rates this year,” says Stijn Van Nieuwerburgh, real estate professor at Columbia Business School. He explains that the Fed’s overall borrowing rate policy significantly influences mortgage rates. With the Fed likely keeping rates high, a significant drop in mortgage rates becomes less probable.
However, there is a silver lining for homebuyers. While the Fed’s decision and high mortgage rates create challenges, there are signs of a slowly increasing housing supply in 2024.
“Compared to last year, homebuyers will have more choices during the spring and summer buying seasons,” says Yun. He adds that there’s potential for even better news in 2025, with mortgage rates potentially dropping closer to 6%.
Despite the high rates, there’s still robust competition for smaller and mid-sized homes, indicating a supply shortage.
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