Watch CBS News

Mortgage interest rate forecast: What experts predict for this year and 2024

Hand holding House
Not sure what to expect from mortgage rates in the future? Here's what the experts predict. Getty Images

The Federal Reserve raised interest rates by 0.25% in late July after a brief pause in June, boosting the target range to a rate of 5.25% to 5.5%. That hike, part of an effort to curb persistent inflation, was one of 11 rate increases by the Fed since March 2022. 

Mortgage interest rates have continued to climb in turn, with the average 30-year fixed-rate mortgage rate at 7.53% as of September 1, 2023. That average rate is about 2% higher than it was the same time last year — and represents the highest average mortgage rate in over 20 years.

Thanks to the elevated mortgage rates, homes are now less affordable for homebuyers. And, the higher rates also make refinancing a less attractive option for current homeowners, as many homeowners currently have mortgages with rates that are lower than what's being offered now.

But what can we expect for mortgage rates going forward? Here's what several housing market experts anticipate for mortgage interest rates through the remainder of 2023 and into 2024.

Explore the rates you could get on a mortgage loan here now.

Mortgage interest rate forecast: What experts predict for this year and 2024

While experts acknowledge several factors are influencing mortgage rates, from treasury yields to the 2024 election, most agree that what happens with inflation will play a key role in the direction of mortgage rates. Here's what they had to say.

Selma Hepp, chief economist at CoreLogic, a real estate data and analytics firm 

"As people run out of their savings left over from the pandemic, spending will begin to slow, and the economy will begin to slow as well. Also, gas prices are rising along with food prices, which will impact household spending — something the Fed pays very close attention to. At some point in the first quarter or second quarter of 2024, the Fed will need to offer relief to these households by cutting rates to lower the cost of borrowing. However, expect elevated mortgage rates to finish the year between 6.5% to 6.8%."

Mike Hardy, managing partner at Churchill Mortgage

"Looking into the crystal ball, I see mortgage rates heading down over the next six to 12 months, with some volatility accompanying this downward trend. I think 30-year rates will be in the ballpark of 5.25% and 15-year rates to be around 4.875% a year from now."

Jack Macdowell, co-founder and CIO at Palisades Group, an asset management firm

"While the dispersion of outcomes is wide, our base case assumes mortgage rates will be tighter by 25 to 50 basis points by the end of the first quarter 2024. This would put the 30-year fixed rate mortgage around 7%."

Ralph DiBugnara, founder of Home Qualified 

"I do believe — outside of the 2020 and 2021 boom — we are back to some normal buying, selling and refinancing cycles, although they are slower because of the raise in rates and lack of homes for sale. The 30-year and 15-year fixed, I believe, will average around 7% and 6.375% during the first quarter of 2024."

Craig Martin, executive managing director at J.D. Power

"Barring any extreme market shocks, we'd expect interest rates to remain at similar levels to where they are at today for the next six to 12 months."

Learn the mortgage loan rates you may qualify for here now.

Alternatives to mortgage loans

In today's high-rate environment, buying a new home can be challenging, and refinancing may not make sense if your current mortgage has a lower rate. However, it may still make sense to buy at a higher rate if the perfect home comes along, provided the monthly payment fits easily into your budget. 

While rates may be above 7% right now, a mortgage loan can be refinanced to a lower rate if mortgage rates drop in the future. However, the perfect home may not come around again, so it can make sense to take out a mortgage loan now and start building equity. 

And, if you've been in your home awhile, you may have sufficient home equity you can tap into to consolidate high-interest debt, fund a home renovation project or cover other expenses. One option is a home equity loan, which is a fixed-rate loan that allows you to borrow money against the equity in your home. Another is a home equity line of credit (HELOC), which is a revolving line of credit with variable interest rates that work much like a credit card. A HELOC lets you draw funds up to your established limit as needed.

Home equity loans and HELOCs often come with interest rates that are lower than those for personal loans or credit cards. As of August 21, the average home equity loan and HELOC interest rates were 8.57% and 8.80%, respectively. These rates are lower than the average 24-month personal loan rate of 11.48% — and considerably less than the average credit card interest rate of 22.16%, per the most recent Federal Reserve data.

If you're a homeowner who needs cash but doesn't want to refinance their lower-rate mortgage, a home equity loan or HELOC enables you to leverage your home's value without impacting your current mortgage. Remember, though, that both home equity loans and HELOCs are secured by your house; this means your home is at stake if you default on the loan.

The bottom line

While keeping a close eye on interest rate trends can help you navigate the housing market, be aware that rate fluctuations can be unpredictable. It's generally wise to base financing decisions on how well they fit within your overall financial plan, long-term goals and unique financial needs.

Regardless of current mortgage rates, you can typically obtain a lower mortgage interest rate by taking steps such as buying points upfront, improving your credit score or making a larger down payment on the home. Keep in mind, even a one-point reduction in mortgage rates could save you thousands of dollars over the life of the loan.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.