There’s good news ahead for buyers looking to purchase a new home in 2024 — interest rates are falling.
Freddie Mac recently reported that 30-year fixed mortgage rates dropped from a high of 7.9 percent in October 2023 to 6.6 percent in mid-January. That’s the lowest they’ve been since May 2023. Fannie Mae’s Economic & Strategic Research group predicts that 30-year fixed averages will drop below 6 percent by the end of the year.
Other prognosticators agree. The National Association of Realtors predicts fixed rates will stay at 6 percent for the next few months. The Mortgage Bankers Association projects rates on a 30-year loan will be 6.1 percent by the end of the year. Bankrate predicts that average 30-year rates could drop as low as 5.75 percent by the end of 2024.
Driving the rate reduction are pauses in federal rate increases by the Federal Reserve. The Federal Reserve has paused three times, with two of these pauses leading to a drop in mortgage rates. On November 1, the date of the second pause, the average interest rate for a 30-year fixed-rate mortgage was 8.06 percent. For a 15-year mortgage, it was 7.20 percent. On December 13, those rates stood at 7.31 percent and 6.70 percent, respectively.
What does that mean for homebuyers? Your monthly mortgage costs could be reduced by an average of $200 a month for a median-priced home. This equates to a savings of $68,000 in interest over the life of your loan.