2024 Mortgage Rate Predictions by Experts

Several experts offer predictions on the average 30-year fixed-rate mortgage in 2024. Lawrence Yun, chief economist at the National Association of Realtors, anticipates rates reaching 7% in a few months and dropping into the 6% range by spring. Crystal Sunbury, senior analyst at RSM U.S. real estate, expects gradual easing, targeting a range of 6% to 6.5% by spring. The Mortgage Bankers Association (MBA) forecasts rates at 6.1% by 2024 and a decline to 5.5% by the end of 2025.

Matt Vernon, head of retail lending at Bank of America, suggests that any rate cuts by the Fed in 2024 might rejuvenate the housing market. Still, significant drops in mortgage rates may only occur later in the year. Jack Macdowell, chief investment officer at Palisades Group, estimates mortgage rates will likely remain in the 7%–7.25% range during Q1 2024. Glenn Brunker, president of Ally Home, predicts a descent from the current rates of around 7.5% in the first half of 2024.

Home Prices Up Every Quarter Since 2012

U.S. home prices experienced a year-over-year increase of 5.5% in Q3 2023, as the FHFA’s Home Price Index reported. Additionally, there was a 2.1% rise from the previous quarter, Q2 2023, marking continuous appreciation in the housing market on a national scale since the start of 2012. Driven primarily by a low supply of homes for sale, house prices saw growth in all census divisions during Q3 2023.

Across the top 100 largest metros, over 93% witnessed a rise in home prices over the past four quarters. Albany-Schenectady-Troy reported the highest increase at 12.4%, while Austin-Round Rock-Georgetown experienced the most significant drop at -5 %. Nearly all states recorded positive appreciation, with Vermont leading with the highest annual appreciation at 11.8%. Only Hawaii (-0.9%) and Washington, D.C. (-0.8%) experienced depreciation in home values.

MBA: October Mortgage Application Payments Rise 2% to $2,199

Homebuyer affordability decreased in October, with the national median payment for purchase applicants increasing to $2,199 from $2,155 in September, according to the Mortgage Bankers Association’s Purchase Applications Payment Index (PAPI). The index, measuring new monthly mortgage payments relative to income, rose 1.2% to 175.9 in October, indicating declining affordability. Higher PAPI values signal a higher mortgage payment-to-income ratio, and the current level is 1.5 points away from its record high in May 2023. Despite increased payments, the strong earnings growth kept the PAPI up 5.2% annually.

The national median mortgage payment was $2,199 in October, reflecting a $44 increase from September and a 9.3% rise compared to the previous year. Affordability challenges are expected to persist through the end of 2023 before showing slight improvement by early next year. Applications for refinancing homes increased by 2%, while mortgage applications for home purchases rose by 3% from the previous week, though still 12% lower than the same week last year.

Source:

Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.