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Mortgage interest rates expected to drop in 2024—here’s how much you could save on monthly payments

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If you were priced out of the housing market in 2023, you might have better luck finding an affordable home in 2024.

Mortgage rates are expected to decrease by nearly 1% by year’s end — from 6.6% down to as little as 5.75% — according to recent housing forecasts. That’s good news for buyers, as the decrease would reduce their monthly mortgage costs by roughly $200 for a median-priced home.

On Thursday, 30-year fixed mortgage rates slid to 6.6% after peaking at 7.79% in October 2023, per Freddie Mac data. That’s the lowest they’ve been since May 2023.

Rates in 2024 are expected to “moderate toward a more normal level,” with 30-year fixed averages dropping below 6% by the end of the year, according to a revised outlook published by Fannie Mae’s Economic & Strategic Research group on Thursday.

This lines up with other recent projections: 

National Association of Realtors chief economist Lawrence Yun predicts 30-year fixed rates are expected to “hold steady” at 6% in “upcoming months.”The Mortgage Bankers Association projects 30-year rates of 6.1% by the end of 2024.More optimistically for homebuyers, Bankrate predicts average 30-year rates of 5.75% by the end of 2024.

Assuming you make a 20% down payment on a median-priced home worth $431,000, the total monthly cost of a mortgage would drop by as much $190, according to CNBC Make It’s mortgage calculator. Here’s a look at the estimated totals based on projected 30-year fixed interest rates:

6.6% (current rate): $2,2026.1%: $2,0895.75%: $2,012

Over the course of the entire mortgage, that could amount to around $68,000 saved on interest.

Note that the totals are for the mortgage amount only and do not include additional expenses like private mortgage insurance, home insurance and property taxes.

While a reduced mortgage rate would provide some measure of cost relief to homebuyers, home prices are also expected to rise in 2024.

The National Association of Realtors expects a modest home price increase of 0.9% from 2023, Fannie Mae projects 2.4% and business intelligence company CoreLogic forecasts a year-over-year gain of 2.5%, as of November 2024. However, it’s worth noting that home price growth can vary considerably by region.

Whether it’s a good time to buy a home will depend on your personal finances and where you want to live. While a 1% drop in mortgage rates might not offer enough cost relief on its own, declining home prices in some regions — especially Florida — could make the difference.

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