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A better tone of inflation data and evidence of slowing economic growth should bring mortgage rates below the 7 percent mark. Whether they stay below 7 percent is contingent on further easing in inflation pressures.
— Greg McBride, Bankrate Chief Financial Analyst
Mortgage rate predictions June 2024
This year’s crop of spring homebuyers took on 7 percent and higher mortgage rates. Those costs could change heading into the summer months, as improving inflation pulls rates lower, according to Bankrate’s newest rate forecast.
“A better tone of inflation data and evidence of slowing economic growth should bring mortgage rates below the 7 percent mark,” says Greg McBride, CFA, chief financial analyst for Bankrate. “Whether they stay below 7 percent is contingent on further easing in inflation pressures.”
That doesn’t mean there won’t be rate fluctuations week to week, even day to day — nor that there’ll be a sudden influx of buyers this summer. Just this past week, borrowers backed away when rates ticked up.
“Borrowers remain sensitive to small increases in rates, impacting the refinance market and keeping purchase applications below last year’s levels,” says Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association.
Mortgage rates have stayed elevated primarily due to inflation, which has yet to resettle at the Federal Reserve’s target of 2 percent. Because of that, the Fed keeps delaying a rate cut, creating an uncertain timeline that has investors bidding up 10-year Treasury yields, the benchmark for 30-year fixed mortgage rates.
The central bank will meet again on June 11-12 — around the same time the latest inflation numbers drop. Using those figures and other data, policymakers will decide whether to stand pat or start reducing interest rates.
It’ll likely be the former, says Melissa Cohn, regional vice president at William Raveis Mortgage.
“Estimates for the first rate cut by the Fed have now been pushed back to November,” Cohn says. “This ongoing hawkish tone has caused bond yields to rise and will likely continue to do so until there is fresh economic data revealing that inflation is moderating.”
Current mortgage rate trends
The average rate on 30-year loans was 7.17 percent as of May 29, according to Bankrate’s survey of lenders. While that’s a welcome drop from 8.01 percent on Oct. 25 of last year, it’s still higher than the 6 percent rates seen in January of this year.
Bankrate’s weekly mortgage rate averages differ slightly from the statistics reported by Freddie Mac, the government-sponsored enterprise that buys mortgages and packages them as securities. Bankrate’s rates tend to be higher because they include origination points and other costs, while Freddie Mac removes those figures and reports them separately. However, both Bankrate and Freddie Mac report similar overall trends in mortgage rates.
When will mortgage rates go down?
Overall, forecasters expect mortgage rates to ease, but they’ve dialed back their expectations for a sharp drop — at least until a Fed cut.
“The Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply,” says Lawrence Yun, chief economist of the National Association of Realtors.
While McBride had initially expected mortgage rates to fall to 5.75 percent by late 2024, the economic reality means they’re likely to hover in the range of 6.25 percent to 6.4 percent by the end of the year.
Mortgage giant Fannie Mae likewise raised its outlook, now expecting 7 percent rates by the end of 2024, compared to an earlier forecast of 6.4 percent.
What to do if you’re getting a mortgage now
Mortgage rates are still at generational highs, but the basic advice for getting a mortgage applies no matter the economy or market:
- Improve your credit score. A lower credit score won’t prevent you from getting a loan, but it can make all the difference between getting the lowest possible rate and more costly borrowing terms. The best mortgage rates go to borrowers with the highest credit scores, usually at least 740. In general, the more confident the lender is in your ability to repay the loan on time, the lower the interest rate it’ll offer.
- Save up for a down payment. Putting more money down upfront can help you obtain a lower mortgage rate, and if you have 20 percent, you’ll avoid mortgage insurance, which adds costs to your loan. If you’re a first-time homebuyer and can’t cover a 20 percent down payment, there are loans, grants and programs that can help. The eligibility requirements vary by program, but are often based on factors like your income.
- Understand your debt-to-income ratio. Your debt-to-income (DTI) ratio compares how much money you owe to how much money you make, specifically your total monthly debt payments against your gross monthly income. Not sure how to figure out your DTI ratio? Bankrate has a calculator for that.
- Check out different mortgage loan types and terms. A 30-year fixed-rate mortgage is the most common option, but there are shorter terms. Adjustable-rate mortgages have also regained popularity recently.
FAQ
FAQs
Mortgage rate predictions June 2024
Will mortgage interest rates go down in 2024? ›
The 30-year fixed mortgage rate is expected to fall to the mid-6% range through the end of 2024, potentially dipping into high-5% territory by the end of 2025. However, recent economic developments have led some forecasters to believe that rates will remain elevated at around 7% for the remainder of this year.
Will mortgage rates ever drop to 3 again? ›
In summary, it is unlikely that mortgage rates in the US will ever reach 3% again, at least not in the foreseeable future.
How high could mortgage rates go by 2025? ›
Prediction of Mortgage Rates for 2025
Keep in mind that inflation is still a factor, and mortgage rates may continue to hover around 6%. Here are some predictions for 2025 from key players and industry associations in the mortgage space: Fannie Mae: 6.1% Mortgage Bankers Association: 5.9%
What is the mortgage interest rate forecast for 2026? ›
The 10-year treasury constant maturity rate in the U.S. is forecast to decline by 0.8 percent by 2026, while the 30-year fixed mortgage rate is expected to fall by 1.6 percent. From seven percent in the third quarter of 2023, the average 30-year mortgage rate is projected to reach 5.4 percent in 2026.
Should I lock my mortgage rate today? ›
Once you find a rate that is an ideal fit for your budget, lock in the rate as soon as possible. There is no way to predict with certainty whether a rate will go up or down in the weeks or even months it sometimes takes to close your loan.
What is the outlook for the US economy in 2024? ›
The U.S. economy continues to grow at a solid pace. Adjusted for inflation, GDP was reported to have increased at a 1.6 percent annual rate in the first quarter of 2024. That was a moderation from a 3.4 percent expansion in the fourth quarter of last year.
Will we see 2% mortgage rates again? ›
In today's housing market, homebuyers should have realistic expectations. Experts predict mortgage rates to inch closer to 6% by the end of the year as inflation cools and the Federal Reserve starts to cut interest rates. Record-low mortgage rates aren't in the cards again, and that's likely for the best.
Will mortgage rates ever hit 4 again? ›
Currently, over six out of 10 purchase and refinance loans are at rates below 4%, according to Freddie Mac. Those ultra-low rates are unlikely to return anytime soon—if at all—resulting in limited motivation for many homeowners to refinance.
Can you get a 3 percent mortgage rate? ›
According to Goldman Sachs, 99% of borrowers have a mortgage rate lower than 6% (or the current market rate). Of those, 28% locked in rates at or below 3% and 72% locked in rates at or below 4%. So if you took on a $700,000 mortgage with a 7% rate, your total monthly payment would be $4,657.
Trading Economics offers a more optimistic outlook, predicting a rise to 5% in 2023 before falling to 4.25% in 2024 and 3.25% in 2025. This forecast is supported by Morningstar's analysis, which projects rates between 3.75% and 4%.
How long will interest rates stay high? ›
Beyond the 35 percent of economists who expect rates to stay high through the end of 2026, 1 in 4 economists (24 percent) see rates holding above 2.5 percent until the end of 2025, while a smaller share (12 percent) see rates sticking at a restrictive level until the end of 2027 or later.
Will credit card interest rates go down in 2024? ›
While the Fed maintained its target rate in the 5.25 percent to 5.50 percent range at its June 2024 meeting, the central bank hasn't yet declared victory in its fight against inflation. However, it seems the Fed is done raising its target rate in this cycle and forecasts one rate reduction later in 2024.
What will mortgage rates be in summer 2024? ›
Mortgage rate predictions for 2024
| Housing Authority | 30-Year Mortgage Rate Forecast (Q2 2024) |
|---|
| Mortgage Bankers Association | 6.70% |
| National Association of Realtors | 6.70% |
| Wells Fargo | 6.75% |
| National Association of Home Builders | 6.85% |
2 more rowsJun 20, 2024
Will mortgage rates come down in the next 5 years? Lord: “For the rest of 2023, I predict rates for the 30-year fixed-rate mortgage will average 7.3%, followed by 6.1% in 2024, 5.5% in 2025, 5% in 2026, 4.5% in 2027, and 4.5% in 2028.
What will Fed interest rate be in 2026? ›
On June 12, 2024, the US Federal Reserve released the June 2024 Fed dot plot, which showed a projected 2.25-point interest rate cut by yearend 2026. This would reduce the fed funds target rate range from 5.25%-5.50% today to 3.00%-3.25%.
Will mortgage rates go down in 2027? ›
However, increases should slow between 2024 and 2026, and rates may even decline in 2027. Among the factors that could impact mortgage rates in the next 5 years are inflation, Federal Reserve policy, and economic growth. Homebuyers should consider locking in a low mortgage rate now, as rates are expected to rise soon.”
What is the forecast for Euribor in 2024? ›
According to Bankinter's Analysis Department, the 12-month Euribor could fall to 3.25% in 2024 and then to 2.75% in 2025. At the same time, S&P projects that interest rates in the eurozone, after reaching a peak in 2023, will begin to decrease in 2024, stabilizing at an equilibrium level between 2% and 2.25%.
Why are mortgage rates so high? ›
When inflation is running high, the Fed raises those short-term rates to slow the economy and reduce pressure on prices. But higher interest rates make it more expensive for banks to borrow, so they raise their rates on consumer loans, including mortgages, to compensate.
Will interest rates go down in 2024 for cars? ›
Auto loan rates are expected to stop rising and possibly start descending in 2024, but they'll likely remain elevated in comparison to recent years (alongside the broader interest rates environment).
