Mortgage rate price predictions are all over Wall Street as mortgage rates drop below 7% for the first time in months. Indeed, with rate cuts on the horizon, it seems housing may finally get the break many real estate economists have been looking for.
With the housing affordability crisis still looming, today came some good news for hopeful homebuyers. The 30-year fixed mortgage rate dropped below 7% for the first time since May.
Mortgage rates are tracking 10-year Treasury yields, which also hit a recent trough in response to yesterday’s surprisingly dovish Federal Reserve meeting. Wall Street has been abuzz since the central bank hinted at the possibility of three or more rate cuts in 2024.
This has resulted in the 10-year yield dropping to below 4% for the first time since August. Mortgage rates tend to closely track 10-year Treasury yields.
As a result, housing economists everywhere are throwing their hats in the ring to share their thoughts on mortgage rates’ futures heading into the new year.
Mortgage Rate Price Predictions
Most major housing firms are unambiguous in their expectations for lower mortgage rates in the new year.
This includes Danielle Hale, chief economist at Realtor.com.
“We expect the mortgage rates to turn the corner. In fact, they have been dropping pretty swiftly in recent weeks, [and] we expect that decline to continue as we move into 2024,” Hale said. “We expect the decline to move into 2024 and see mortgage rates at about 6.5% at the end of 2024 – and to average about 6.8% for the calendar year.”
Meanwhile, a Fannie May expert survey panel predicted rates will fall as low as 5.7% next year.
Others believe rates may have some room to climb in 2024 before easing back down. This includes the Mortgage Bankers Association, which forecasts rates to trend around 7% next year before eventually falling to 6.1% by the end of the year.
Redfin’s economists are even more pensive. The real estate brokerage believes rates will hang around 7% in Q1 before slowly inching down to 6.6% by the end of next year, assuming the Fed starts cutting rates this summer.
That said, Redfin believes mortgage rates will likely stay above pandemic levels due to the economy’s general resilience.
“Mortgage rates are likely to remain well above pandemic-era record lows because financial markets increasingly believe the country will avoid a recession in 2024,” Redfin analysts wrote.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
