This 2024 mortgage rates forecast compiles data from 4,000 days of mortgage rates to highlight trends and make useful predictions for first-time home buyers. Share our findings with your friends, colleagues, and buyer’s agent.
Here are the highlights of our 2024 mortgage rate forecast:
- Heading into 2024, mortgage rates dropped faster in the preceding 8 weeks than any 8 weeks since 1982
- Mortgage rates drop 91 basis points, on average, one year after the Federal Reserve stops raising rates and the Fed stopped raising rates in July 2023
- First-time home buyers will see 4.25% mortgage rates no later than this summer
Want to check our predictions? See today’s mortgage rates.
As a bonus, we built a mortgage rate roller coaster that follows the precise path of the 30-year fixed-rate mortgage rate for conventional mortgages in the 12 years, 2012-2023. Ride it from the first seat.
Disclaimer: Motion Sickness Warning
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Mortgage Rate Roller Coaster - Don't Vomit
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Mortgage Rate Roller Coaster Dataplot
This is the mortgage rate path used in the mortgage rate roller coaster animation. It shows conventional, 30-year fixed-rate mortgage rates from January 2012 through mid-December 2023.
Homebuyer.com uses the FRED® API but is not endorsed or certified by the Federal Reserve Bank of St. Louis.
Data: Freddie Mac. Do not reprint without permission.
TABLE OF CONTENTS
- →The Voyage: Mortgage Rates Put Home Buyers On A Ride
- →El Toro: A Bull Run For 2024 Mortgage Rates
- →Our Sooper Dooper Methodology
- →Mortgage Rate Data: Heartline Rolls
The Voyage: Mortgage Rates Put Home Buyers On A Ride
2023 was a challenging year for first-time home buyers. So, if you find yourself wondering whether now is a good time to buy a home, think back to a year ago when the market felt bleak.
Mortgage rates were rising, home prices were up, and home affordability was a multi-decade worst. Yet, if you bought a home in January 2023, you have to feel good about that today.
It didn’t feel like it then, but January was the best time of year to buy your first home, so let’s recap the year that was.
X2: Mortgage Rates Doubled (January – February 2023)
January mortgage rates were near six-and-half percent, double the rate from one year prior. Existing home supply had dropped to 2.9 months, which was the lowest in recorded history at the time. And, home values had just posted a 10.2 percent annual gain nationwide.
A lot of home buyers chose to sit the market out. Here’s what happened next.
In early-February 2023, the Federal Reserve raised the Fed Funds Rate by 25 basis points. The move was the central banker’s eighth straight rate hike, but also its smallest increase in a year. Wall Street took this muted action to mean that inflation was coming under control, so mortgage rates dropped because mortgage rates tend to follow inflation expectations.
Then, the corkscrew started.
The Lightning Rod: Inflation Pressures (March – October 2023)
In mid-March, with strong economic data casting doubt on the death of inflation, the Federal Reserve raised its benchmark interest rate another 25 basis points and followed the action with hawkish comments and a promise to raise rates again if needed.
Mortgage rates popped back up.
Then, in April, fears of a recession took hold and mortgage rates dropped.
Next, in May, with the threat of a government shutdown looming, 30-year fixed-rate mortgage rates took large biggest weekly jumps to reach past 6.75 percent, which was the highest mortgage rate in more than 15 years.
Meanwhile, with an existing home inventory of just 22,000 homes by state and intense competition among buyers, the typical home sold in less than 20 days, and home prices ratcheted higher.
Home affordability was its worst in two decades. Many first-time home buyers would have been priced out completely without the FHFA First-Time Home Buyer Mortgage Rate Discount and the new, lower mortgage insurance premiums on FHA loans.
So, on July 26, 2023, when the Fed pushed the Fed Funds Rate up to 5.25%, and suggested rates would stay “higher for longer,” mortgage-backed securities collapsed. The market went haywire. Lenders couldn’t price loans. Buyers couldn’t get a mortgage rate lock without pay discount points – sometimes as many as four.
But the good news for buyers was that this increase marked the end of the Federal Reserve’s rate hikes, and since 1990, mortgage rates have dropped an average of 91 basis points twelve months after a Federal Reserve pause.
Mortgage Rates After The Fed Stops Hiking Rates
| Date of Last Fed Rate Hike | 12-Month Mortgage Rate Decrease |
|---|---|
| 3/3/1995 | -1.15% |
| 5/19/2000 | -1.50% |
| 6/29/2006 | -0.11% |
| 12/20/2018 | -0.88% |
| 07/26/2023 | [TBD] |
The Beast: A Downhill Finish For The Year (November – December 2023)
It wasn’t until the Federal Reserve’s October 31 – November 1, 2023, meeting that home buyer fortune turned. Fed Chair Jerome Powell about-faced and suggested that inflation may be coming into control after all.
Over the next six weeks, emerging data proved Powell was right. All key indicators showed a slowing in domestic prices and growth while the economy remained strong. It was the “soft landing” Wall Street was looking for.
November 1, 2023, kicked off a historic run lower for mortgage rates that stretched seven weeks and saw 30-year mortgage rates drop from a 23-year high to a manageable level for home buyers who find 2024 beginning with mortgage rates exactly where they were a year ago.
The difference? Persective.
Buyers hated mortgage rates last year when they were 6.25%. They love mortgage rates at 6.25% today.
El Toro: A Bull Run For 2024 Mortgage Rates
Mortgage rates will decrease in 2024, and buyers will pay fewer discount points. By summer, first-time home buyers should expect current mortgage rates near 4.25 percent.
Here are the reasons why.
Cosmic Rewind for Inflation Pressures
Inflation will cease to be a story in 2024.
Personal Consumption Expenditures, the Federal Reserve’s preferred inflation gauge, is down two-thirds from its mid-2022 peak. The Fed successfully weakened demand for goods and services through 11 consecutive rate hikes that lifted the Fed Funds Rate from a target range near zero to 5.25 percent, while creating space for the domestic supply chain to normalize post-pandemic.
It’s the soft landing everyone’s been asking for.
The Fed concluded its last scheduled meetings of 2023 with a message that inflation is slowing and approaching the group’s 2 percent annual target. It also acknowledged that it’s started discussions about when cuts to the Fed Funds Rate will be warranted.
Inflation isn’t dead, but we’ve all moved on.
Full Throttle on Mortgage Bonds
Mortgage rates begin 2024 on an 8-week win streak, the longest in 13 years.
During that span, the 30-year fixed-rate mortgage rate shed more than 150 basis points to drop rates from the eights into the 6s. Home buyers have 16% more purchasing power today.
Rates will push even lower as mortgage markets return to balance.
Last year was characterized by uncertainty and fear. Wall Street lost its appetite for mortgage-backed securities (MBS), the driver of U.S. mortgage rates. Investors harbored concerns that inflation would return and were unwilling to buy mortgages at almost any rate, which is why mortgage rates and fees soared in 2023.
For 2024, that mindset is shifted and Wall Street is jumping back into MBS.
- Inflation is returning to normal levels
- The underlying U.S. economy is strong
- Serious mortgage delinquencies are their fewest since 2006
Housing and mortgage activity will pick up in 2024. Mortgage rates will hit 4.25 percent. Rates in the 3s would not be absurd.
A Potential Xcelerator: Help From Congress
As 2024 kicks off, Congress is sitting on several bills that would make homeownership more accessible and affordable for first-time home buyers.
The bill will the strongest momentum is the HELPER Act, a 100% mortgage for teachers and first responders.
Since its introduction in May 2023, the bi-partisan, bi-cameral HELPER Act, which stands for “Homes for Every Local Protector, Educator, and Responder,” has amassed more than 100 co-sponsors in the House and 14 in the Senate.
Another bill with momentum is the Downpayment Toward Equity Act, which gives a $25,000 cash grant to first-time home buyers who are also first-generation home buyers.
Other bills that could pass in 2024 include:
- The DASH Act, an automatic $15,000 first-time home buyer tax credit
- The LIFT Act, an ultra-low mortgage rate loan for first-time buyers
- The More Homes On The Market Act, a bill to increase the existing home inventory
Congress did not re-introduce the Biden First-Time Home Buyer Tax Credit from its last session, a tax credit modeled on the $8,000 First-Time Home Buyer Tax Credit of 2009. The bill was recently re-introduced as a $10,000 first-time home buyer mortgage relief credit.
The Biden relief credit is the easiest bill to pass into law because the tax code for it already exists. The bill could be introduced at any time in 2024.
None of the above bills are available until Congress passes them into law. Until then, buyers can choose from a list of low-down payment mortgages that make first-time homeownership affordable.
The Wild Card: What Could Go Wrong
Mortgage rate forecasts can help you decide whether it’s a good time to buy a home, but forecasts can’t predict the future. Forecasts are projections based on data available today.
Every year, some “market shock” event changes the path of mortgage rates. We never know what it will be.
Here’s a list of each year’s surprise events from 2000-2023. None of the events were predicted at the start of each respective year. Each affected mortgage rates and home affordability for first-time home buyers.
2000-2023: Surprise Events That Changed the Course for Mortgage Rates
| Year | Market Shock Event |
| 2000 | The Dotcom Bubble Burst |
| 2001 | 9/11 Terrorist Attacks |
| 2002 | Enron Corporate Scandal |
| 2003 | Iraq War |
| 2004 | 60% Surge In Oil Prices |
| 2005 | Hurricane Katrina |
| 2006 | Housing Market Weakens |
| 2007 | Financial Crisis Begins |
| 2008 | The Global Financial Crisis |
| 2009 | Economic Stimulus Plan |
| 2010 | Stock Market Flash Crash |
| 2011 | U.S. Credit Rating Downgrade |
| 2012 | The Fiscal Cliff |
| 2013 | Federal Reserve Tapering Plan |
| 2014 | Oil Prices Crash 45% |
| 2015 | China’s Economic Slowdown |
| 2016 | Brexit Uncertainty |
| 2017 | Tax Cuts and Jobs Act |
| 2018 | Turkey & Argentina Market Turmoil |
| 2019 | Global Economic Slowdown |
| 2020 | COVID-19 Pandemic |
| 2021 | Pandemic Recovery & Inflation |
| 2022 | Runaway Inflation |
| 2023 | Inflation Persists |
Our Sooper Dooper Methodology
The data for our mortgage study was gathered from the Freddie Mac Primary Mortgage Market Survey, the Federal Reserve website, the FFEIC website’sSnapshot National Loan Level Dataset, and first-party Homebuyer.com data. The FFEIC Snapshot files contain national Home Mortgage Disclosure Act (HMDA) datasets, modified to protect applicant and borrower privacy.
Despite the thorough nature of HMDA data, our study required additional calculations to derive more complex mortgage statistics. Market share percentages and comparison figures required advanced mathematical calculations, which we queried using Google BigQuery and custom Python scripting.
To ensure the accuracy of our study, we relied on the robustness of the Freddie Mac and HMDA data, and the precision of our queries.
This study tracks the 30-year conventional fixed-rate mortgage and the home buyers that use it. We did not include the use of discount points in our mortgage rate forecast and tracking.
You may also be interested in our companion report,Generational Home Buyer Statistics, which lists more than 100 U.S. home buyer and homeowner statistics.
Mortgage Rate Data: Heartline Rolls
This section presents Freddie Mac Primary Mortgage Market Survey (PMMS) data from 2012 to 2023. The tables are arranged by month and year to highlight seasonal trends and patterns.
Weekly Mortgage Rates
| 2012 | 2013 | 2014 | 2015 | |
| January | 3.91% | 3.34% | 4.53% | 3.73% |
| February | 3.87% | 3.53% | 4.23% | 3.59% |
| March | 3.90% | 3.52% | 4.28% | 3.75% |
| April | 3.98% | 3.54% | 4.41% | 3.70% |
| May | 3.84% | 3.35% | 4.29% | 3.80% |
| June | 3.67% | 3.91% | 4.14% | 3.87% |
| July | 3.62% | 4.29% | 4.12% | 4.08% |
| August | 3.55% | 4.39% | 4.14% | 3.91% |
| September | 3.55% | 4.57% | 4.10% | 3.89% |
| October | 3.36% | 4.22% | 4.19% | 3.85% |
| November | 3.39% | 4.16% | 4.02% | 3.87% |
| December | 3.34% | 4.46% | 3.89% | 3.93% |
| 2016 | 2017 | 2018 | 2019 | |
| January | 3.97% | 4.20% | 3.95% | 4.51% |
| February | 3.72% | 4.19% | 4.22% | 4.41% |
| March | 3.64% | 4.10% | 4.43% | 4.41% |
| April | 3.59% | 4.10% | 4.40% | 4.08% |
| May | 3.61% | 4.02% | 4.55% | 4.14% |
| June | 3.66% | 3.94% | 4.54% | 3.82% |
| July | 3.41% | 3.96% | 4.52% | 3.75% |
| August | 3.43% | 3.93% | 4.60% | 3.75% |
| September | 3.46% | 3.78% | 4.54% | 3.49% |
| October | 3.42% | 3.85% | 4.71% | 3.65% |
| November | 3.54% | 3.94% | 4.83% | 3.69% |
| December | 4.08% | 3.94% | 4.75% | 3.68% |
| 2020 | 2021 | 2022 | 2023 | |
| January | 3.72% | 2.65% | 3.22% | 6.48% |
| February | 3.45% | 2.73% | 3.55% | 6.09% |
| March | 3.29% | 3.02% | 3.76% | 6.65% |
| April | 3.33% | 3.18% | 4.72% | 6.28% |
| May | 3.26% | 2.96% | 5.27% | 6.39% |
| June | 3.18% | 2.99% | 5.09% | 6.79% |
| July | 3.07% | 2.98% | 5.30% | 6.81% |
| August | 2.88% | 2.77% | 4.99% | 6.90% |
| September | 2.93% | 2.87% | 5.66% | 7.12% |
| October | 2.88% | 2.99% | 6.66% | 7.49% |
| November | 2.78% | 3.09% | 6.95% | 7.63% |
| December | 2.71% | 3.11% | 6.49% | 6.75% |
Source: Freddie Mac Primary Mortgage Market Survey
