Several Experts Predict Mortgage Rates Could Dip Below 6% by the End of the Year

Currently, there is considerable market uncertainty regarding the day-to-day fluctuations in mortgage rates. However, the essential takeaway is this: in contrast to the nearly 8% peak observed last autumn, mortgage rates have generally decreased over time.

For those considering a home purchase or sale, this holds significant importance. Although mortgage rates may experience some fluctuations due to different economic factors such as inflation and responses to the consumer price index (CPI), it's crucial not to be swayed by short-term volatility. Experts are in consensus that the overall downward trend is expected to persist throughout the year.

Although we may not experience the historically low mortgage rates seen during the pandemic, there is a belief among some experts that rates could decrease to below 6% later this year, as stated by Dean Baker, Senior Economist at the Center for Economic Research.

"It is highly unlikely that they will reach the lows seen during the pandemic. However, there is a possibility that we might witness rates drop below 6.0 percent, a level that would be considered low based on pre-Great Recession standards."

Baker is not alone in suggesting this scenario. The most recent Fannie Mae forecasts also suggest the potential for a rate below 6% by the conclusion of this year (refer to the green box in the chart below).

The chart displays Fannie Mae's mortgage rate forecasts for 2024, featuring the December projection alongside the updated 2024 forecast released just one month later. Upon closer inspection, it becomes evident that the projections are trending downward.

It's a standard practice for experts to adjust their forecasts as they monitor current market trends and the broader economic landscape. However, this indicates that experts are expressing confidence in the continued decline of rates, contingent upon inflation cooling down.

What This Means for You

It's important to bear in mind that no one can definitively predict what will occur, or when it will happen, and that short-term fluctuations are normal. Therefore, it's essential not to be alarmed by minor changes and instead concentrate on the broader perspective.

If you have discovered a home that you adore in the current market, particularly in a situation where finding a home that aligns with your budget and requirements can be difficult, it's likely unwise to attempt to predict the market and postpone your purchase until rates fall below 6%.

Given that rates are currently lower than they were last autumn, you have a present opportunity at hand. Even a slight decrease of a quarter point in rates can enhance your purchasing power.

Bottom Line

Remember wanting to move but holding off for lower rates? This could be your moment! Rates are more favorable than last year, and further declines are possible. Let a real estate agent guide you through the process and help you find your dream home.