Which Mortgage Rate Are You Holding Out For?

It’s undeniable that mortgage rates have significantly affected housing affordability over the past few years. However, there's reason for optimism. Rates have begun to decrease and recently reached their lowest point of 2024, according to Freddie Mac (see graph below):

If you’re considering buying a home, you might be wondering: how much lower can mortgage rates go? Here's what you need to know.

Expert Predictions for Mortgage Rates

Experts predict that mortgage rates will continue to trend downward as long as inflation and the economy keep cooling. However, expect some volatility as new reports on these key indicators are released.

It’s important not to let those fluctuations distract you from the overall trend. Rates are currently down about a full percentage point from their peak earlier this year. The consensus is that rates in the low 6% range are possible in the coming months, depending on economic conditions and the Federal Reserve's decisions.

Many experts are already revising their 2024 mortgage rate forecasts with a more optimistic outlook. For example, Realtor.com states:

“Mortgage rates have been revised slightly lower as signals from the economy suggest that it will be appropriate for the Fed to begin to cut its Federal Funds rate in 2024. Our yearly mortgage rate average forecast is down to 6.7%, and we revised our year-end forecast to 6.3% from 6.5%.”

Determine Your Ideal Mortgage Rate

What does this mean for your home-buying plans? If you’ve been waiting for rates to drop, it’s already happening. Now, you need to determine when you're ready to make a move based on expert projections and your budget. As Sam Khater, Chief Economist at Freddie Mac, notes:

“The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move.”

As a next step, ask yourself this:?what number do I want to see rates hit before I’m ready to move?

So, ask yourself: what rate would make you comfortable enough to re-enter the market? Whether it's 6.25%, 6.0%, or even 5.99%, identifying your target rate will help guide your decision. Instead of tracking rates yourself, connect with a local real estate professional. They’ll keep you updated on market trends and let you know when your desired rate is within reach.

Bottom Line

If higher mortgage rates have paused your moving plans, think about the rate you’re waiting for to get back in the market. Once you have that number in mind, work with a real estate professional who can notify you when it’s time to take action.