After reaching their peak for the year of 7.9% in October of 2023, the tide is finally turning for mortgage rates in 2024. According to an emailed statement reported by Forbes, Danielle Hale, chief economist at Realtor.com, had this to say. "Mortgage rates will continue to ease in 2024 as inflation improves and Fed rate cuts get closer. Mortgage rates could near 6.5% by the end of the year, a key factor in starting to provide affordability relief to homebuyers."
Over the past few years, rates hit their highest peaks in decades. A forecast of lower rates is a welcome relief to those looking to buy, sell and refinance — but what exactly does it mean for each one? Below, we'll briefly summarize the opportunities lower rates could open up for you.
Refinancing
Refinance activity has been minimal over the past year, but with declining mortgage rates, some borrowers are jumping at the opportunity to refinance and lower their monthly payments. If you bought your home when rates were high, you could already get some savings by refinancing now. Homeowners who wait for rates to hit even 5.5% could save an average of $284 a month.
Over 40% of U.S. mortgages originated in 2020 and 2021, because rates were at record lows. In addition to home sales, about 14 million homeowners refinanced. If you didn't get a chance to refinance during that period, 2024 could be a favorable year if rates drop from when you first got your mortgage. Keep in mind, however, that just because you can get a lower rate doesn't necessarily mean you should refinance. Depending on the type of loan you have, refinancing could extend the life of your loan and cost you more in interest over time.
Buying
For prospective homebuyers, lower mortgage rates could be a key factor in housing becoming more affordable this year. It will, however, also make for a more competitive market. If you're thinking about buying a home going into the spring market, make sure to get all of your finances in order now. Keep an eye on rates, your credit score and start thinking about what your budget for homeownership will look like.
Of course, it's always important to shop around for the best mortgage rate possible for your unique situation. You can save thousands of dollars over the term of a loan by comparing quotes from two or more lenders — the more options you have, the more you can potentially save.
Selling
Lower rates aren't just a good thing for buyers. Sellers can benefit as well, as more eager buyers can introduce more competition into the marketplace. With more people interested in buying, sellers can be more selective. Lower-cost financing can also boost home prices and give you more power in the negotiation process.
Be Proactive and Stay Informed
Regardless of where you are in the process of buying, selling or refinancing, being informed is the best first step. With this information, you're better prepared to navigate the real estate landscape and make decisions that align with your long-term goals. As the real estate market continues to evolve, being proactive and informed will be key to maximizing the benefits of the current environment.
