IvoryscholarshipMortgage rates have started to fall after reaching a peak in 2024. In May, the 30-year fixed mortgage rate was at 7.22%. According to Freddie Mac, the rate has reduced to 6.73% in August. This decrease indicates a 22 basis point dip from July to August. A basis point is 1/100th of a percentage point.
Expert Predictions
Experts do not expect mortgage rates to fall considerably in the near future, even if the Federal Reserve lowers its benchmark interest rate at the September meeting.
Freddie Mac predicts that rates will remain over 6.5% for the majority of 2024 before perhaps falling below that level in 2025.
Fannie Mae forecasts an average rate of 6.8% in Q3 and 6.7% in Q4 2024, with a further decline to 6.5% in Q1 2025.
National Association of Realtors (NAR): Expects an average rate of 6.9% in Q3 2024, with a little reduction to between 6.5% and 6.7% by the end of the year.
Mortgage Bankers Association (MBA): Rates are expected to average 6.8% in Q3 and decline to 6.6% in Q4, then falling further to 6.4% in Q1 2025.
Palisades Group expects rates to remain above 6.25% through 2024.
RE/MAX predicts that rates will fall to 6.6% by the end of Q1 2025.
HSH.com predicts that rates will average between 6.6% and 6.9% until September 2024.
LoanDepot predicts rates will fall to the mid-six percent range by the end of the year.
The Federal Reserve’s influence
The Federal Reserve’s recent decision to leave the benchmark federal funds rate unchanged has had an influence on mortgage rates. This rate has been between 5.25% and 5.5% for the past eight meetings. A prospective rate cut in September could have an impact on mortgage rates, but major drops are not expected right away.
Impact on Refinancing
Refinancing may not be an option for most homeowners in 2024 due to the present higher rate environment, particularly for those who obtained mortgages at record low rates in 2020 and 2021. However, it may still be advantageous for people with rates higher than 7%. Experts anticipate refinancing activity will increase if the Fed lowers interest rates and mortgage rates fall proportionately.
Refinancing Activity Trends
Refinancing activity has fluctuated week to week, although it has consistently grown compared to last year. Future rate decreases by the Federal Reserve, for example, may encourage more borrowers to refinancing their loans.
Tips to Lower Mortgage Refinance Rates
To get a cheaper refinance rate, explore the following strategies:
Request quotations from several lenders.
Negotiate the closing costs.
Increase your credit score.
Prepare for a bigger down payment.
Choose a shorter-term loan.
Purchase discounted points.
Long-term Predictions
Experts predict that mortgage rates will linger around 5% over the next year, driven by factors such as inflation and the presidential election. Once interest rates continue to fall, housing inventory will become increasingly important in market dynamics.
Conclusion
Mortgage rates are likely to stay quite high until 2024, with a gradual decline expected in the following year. Refinancing may be beneficial to some borrowers, particularly those with higher current rates. Monitoring rates and assessing personal financial situations are critical for making sound judgments.
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