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What Will Mortgage Rates Be in 2024?

what will mortgage rates be in 2024

Mortgage rates have been on a roller coaster lately, and it’s crucial for anyone in the market for a home or looking to refinance to stay informed.

In this post, I’ll provide an update on the current state of mortgage rates, their recent fluctuations, and what these changes mean for you as we head towards the end of the year and into 2024.

What's going on with mortgage rates today?

After a turbulent period with rates soaring into the high 7% and even 8% range, there’s finally some good news. Rates have dipped back under 7%. This decline comes as a relief, especially considering the consistent rate hikes observed in October and November.

We have witnessed firsthand the challenges these increasing rates have posed for our clients, as rates have made it increasingly more expensive to afford a home.

Our current mortgage rates

Why have mortgage rates moved so much?

The primary driver behind these soaring rates has been inflation and the Federal Reserve’s efforts to combat it.

Mortgage rates are closely tied to bond yields, particularly the 10-year treasury bond. In an inflationary environment, bond yields rise as investors seek higher returns to offset the diminishing purchasing power. This increase in bond yields directly impacts consumer loans, including mortgages, credit cards, and auto loans.

Economic Indicators Pointing to a Shift

Recent economic data suggests a shift that could influence future rate trends. For instance, the latest Consumer Price Index (CPI) report indicated a stabilization in inflation rates. Core CPI, a critical measure for the Fed, rose at its slowest pace since 2021. Additionally, other economic indicators like the labor market are showing signs of slowing growth.

Federal Reserve's Stance and Market Predictions

Despite these indicators, Federal Reserve Chair J. Powell has cautioned that it’s too early to consider cutting interest rates, hinting at the possibility of further rate hikes. However, market sentiment is leaning towards no rate increase in the upcoming Federal Reserve meeting on December 12th. 

What will mortgage rates be in 2024 and 2025?

Looking ahead, the Mortgage Bankers Association’s latest forecast suggests a slight drop in rates in early 2024, followed by a more substantial decrease as the year progresses. This trend could significantly benefit both recent and long-term homeowners.

By 2025, we might see mortgage rates stabilizing around what many consider ‘normal’ rates, with predictions hovering around 5%.

In conclusion

Understanding these trends in mortgage rates is crucial for making informed decisions in the housing market. Whether you’re planning to buy a new home, refinance, or even sell, keeping an eye on these developments will help you navigate these changing tides.

Stay tuned for more updates and insights into the mortgage and real estate markets. Here at Andes Mortgage, we will do our best help you stay on top of what’s going with rates and changes in the mortgage and real estate industry. 

If you are in the market of obtaining a home loan, we would be pleased to help you. You can start here for a custom rate quote and information for your situation.

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