Homebuyers finally began to see a turning point in mortgage interest rates as of June 2024. The Federal Reserve declined to raise overnight borrowing rates to banks, keeping them at 5.25%-5.50%. It’s a welcome sign that inflation is inching closer to the Fed’s target rate of 2%. But the Fed also announced that there will likely be only one rate cut by the end of the year, which is enough to significantly impact the housing market.
While mortgage rates immediately began pulling back to the lowest levels since the previous March, they remained stubbornly around 7% for the benchmark 30-year fixed rate mortgage. The caveat is that this rate is only available to those with near perfect credit who have the wherewithal to put 20% down on a home. That could explain why housing sales volume remains 10% below that of mid-year 2023.
Most housing economists believe that rates will drop by the end of 2024, but not by much.
Government-sponsored mortgage buyer Fannie Mae predicts that mortgage rates will average 7% in 2024. The Mortgage Bankers Association, Realtor.com, and Wells Fargo all say mortgage rates will fall to 6.5% by the end of 2024.
The difference between 7% and 6.5% is $122 per month on a $400,000 mortgage. Talk to your Berkshire Hathaway HomeServices network professional to get insights on the current housing market. You might find that buying a home now, even with a higher interest rate, could be advantageous if home prices are on the rise.
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