Housing Interest Rates and the 2024 Market
But that doesn’t tell the whole story of what to expect from mortgage loan rates in 2024. Is waiting to buy a home well into the new year safer? Or should consumers expect more of the same higher rates in the new year as we saw in 2023?
FHA Mortgage Rate Predictions for 2024
No, the rate predictions covered here aren’t just for FHA mortgages, but FHA home loans are part of those observations. Business Insider repeats the Fannie Mae prediction for 2024 that rates may reside between 6.4% and 7.1% for 30-year fixed-rate conventional mortgages.
The National Association of Realtors takes a less conservative approach, predicting rates could fall as low as 6.1% in 2024.
These are predictions only, and a variety of factors, including Fed policy changes and investor reactions to those changes, will contribute toward the interest rate environment in the new year.
Will FHA Mortgage Rates Fall Back to 3% in 2024?
With the caveat that anything is possible in the new year, a look at current conditions seems to indicate that rates will not fall anywhere close to 3% in 2024. One reason for that? Time. Home loan interest rates didn’t hit historic lows overnight.
The mortgage rates fell lower and lower over time until they finally made history. But that doesn’t mean that the conditions responsible for a 3% rate environment will repeat again soon.
Business Insider rightfully notes, “Think about the reason why rates went so low in the first place: In response to the COVID-19 pandemic, the Fed cut the federal funds rate to near zero and purchased a large number of mortgage-backed securities to stave off an economic crisis.“
That’s part of what helped mortgage rates to reach those historic lows.
Should You Wait to Buy a Home?
Borrowers hoping to wait out the current rate environment for a much lower mortgage rate will likely be waiting a long time.
Those who wait out smaller rate changes and move when rates are closer to the mid-6% range likely won’t wait as long, but credit scores and debt ratios count more in the current market. With that in mind, it pays to invest more time in your FICO scores and debts.
Some will buy and plan to refinance later, which is a smart move. The key is to give yourself as many advantages in the current housing market as possible.
Making a larger down payment, paying more on your mortgage each month, and considering an adjustable rate mortgage can all help manage the higher long-term costs associated with higher rates until they go low enough to justify refinancing.
Annual Income Requirements for FHA Loans
Good Credit History Helps Get FHA Loans
Stay Informed About Your Mortgage Closing Costs
Do you know what's on your credit report?
Learn what your score means.