Some Experts Say Mortgage Rates May Fall Below 6% Later This Year

There is considerable uncertainty prevailing in the market regarding the day-to-day fluctuations in mortgage rates at present. However, here's the key takeaway: in comparison to the nearly 8% peak observed last fall, mortgage rates have predominantly shown a downward trend.

For individuals considering buying or selling a home, this development holds significant importance. Despite the likelihood of continued minor fluctuations influenced by various 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 concur that the overarching downward trajectory is anticipated to persist throughout this year.

While it's improbable to witness the exceptionally low rates experienced by homebuyers during the pandemic, some analysts suggest that rates may dip below 6% later in the year.

As noted by Dean Baker, Senior Economist at the Center for Economic Research, says:

“They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”

And Baker isn't alone in suggesting this scenario. The most recent projections from Fannie Mae also suggest the possibility of a rate dropping below 6% by the end of the year (refer to the green box in the chart below):

The chart displays Fannie Mae's mortgage rate projections for 2024, featuring both the December forecast and the updated forecast released just a month later. Upon closer inspection, it's evident that the projections are trending downwards.

It's customary for experts to revise their forecasts as they monitor current market trends and the overall economy. However, this trend underscores the confidence among experts that rates are likely to continue declining, contingent upon a cooling of inflation.

What This Means for You

However, it's important to remember that no one can accurately predict future events or their timing, and short-term fluctuations are expected. Therefore, don't let minor changes unsettle you; instead, focus on the broader perspective.

If you've discovered a home that fits your criteria in today's market, especially considering the challenges of finding a suitable home within your budget, it's likely not advisable to attempt timing the market in hopes of rates dropping below 6%.

Given that rates are already lower than they were last fall, the current moment presents an opportunity. Even a slight decrease of a quarter point in rates can significantly enhance your purchasing power.

Bottom Line

If you were considering a move last year but delayed in anticipation of lower rates, now might be the opportune moment to take action.

When you’re ready to get the process started, let’s connect.