Written by Dan Green
Dan Green
Dan Green (NMLS 227607) is a licensed mortgage professional who has helped millions of people achieve their American Dream of homeownership. Dan has developed dozens of tools, written thousands of mortgage articles, and recorded hundreds of educational videos. Read more about Dan Green.
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Updated: September 22, 2024
This 2024 mortgage rates forecast compiles data from 4,000 days of mortgage rates. It highlights trends and makes predictions for first-time home buyers. Share our findings with your friends, colleagues, and buyer’s agent.
The projections in this post are the opinion of the author and do not reflect the opinions of Homebuyer.com.
Here are the highlights of the 2024 mortgage rate forecast:
As a bonus, view the mortgage rate roller coaster that follows the path of the 30-year fixed-rate mortgage rate for conventional mortgages from 2012-2023. Ride it from the first seat.
Be advised that this page contains video content that may induce motion sickness. If you are prone to motion sickness or experience discomfort while watching similar content, please exercise caution. Stop the video immediately if discomfort occurs.
This video is best watched in full-screen mode with sound on.
This is the mortgage rate path used in the mortgage rate roller coaster animation. It shows conventional, 30-year fixed-rate mortgage rates from January 2012 through mid-December 2023.
2023 was a challenging year for first-time home buyers. If you find yourself wondering whether now is a good time to buy a home, think back to a year ago when the market felt bleak.
Mortgage rates were rising, home prices were up, and home affordability was at a multi-decade worst. Yet, if you bought a home in January 2023, you likely feel good about that decision today.
It didn’t feel like it then, but January was the best time of year to buy your first home, so let’s recap the year that was.
In January, mortgage rates were near six-and-a-half percent, double the rate from a year earlier. Existing home supply dropped to 2.9 months, the lowest in recorded history at the time, and home values posted a 10.2 percent annual gain nationwide.
Many home buyers chose to sit out of the market. Here’s what happened next.
In early February 2023, the Federal Reserve raised the Fed Funds Rate by 25 basis points. This marked its eighth straight rate hike but was also the smallest increase in a year. Wall Street interpreted this as a sign that inflation was coming under control, causing mortgage rates to drop. Mortgage rates typically follow inflation expectations.
Then, the corkscrew started.
In mid-March, strong economic data raised doubts about inflation easing. The Federal Reserve responded by raising its benchmark interest rate another 25 basis points, accompanied by hawkish comments and a promise to raise rates again if necessary.
Mortgage rates rose once more.
In April, fears of a recession took hold, and mortgage rates dropped again.
By May, with the threat of a government shutdown looming, 30-year fixed-rate mortgage rates saw their biggest weekly jumps, surpassing 6.75 percent—the highest rate in over 15 years.
With an existing home inventory of just 22,000 homes by state and intense competition among buyers, the typical home sold in less than 20 days, pushing home prices higher.
Home affordability reached its worst point in two decades. Many first-time home buyers would have been priced out without the FHFA First-Time Home Buyer Mortgage Rate Discount and lower mortgage insurance premiums on FHA loans.
When the Fed raised the Fed Funds Rate to 5.25% on July 26, 2023, and suggested that rates would remain “higher for longer,” mortgage-backed securities collapsed. Lenders couldn’t price loans, and buyers had to pay discount points to lock in mortgage rates—sometimes as many as four points.
The good news for buyers was that this increase marked the end of the Federal Reserve’s rate hikes. Historically, mortgage rates have dropped an average of 91 basis points twelve months after a Federal Reserve pause.
| Date of Last Fed Rate Hike | 12-Month Mortgage Rate Decrease |
|---|---|
| 3/3/1995 | -1.15% |
| 5/19/2000 | -1.50% |
| 6/29/2006 | -0.11% |
| 12/20/2018 | -0.88% |
| 07/26/2023 | [TBD] |
It wasn’t until the Federal Reserve’s October 31 – November 1, 2023 meeting that home buyer fortunes turned. Fed Chair Jerome Powell suggested that inflation may be coming under control after all.
Over the next six weeks, emerging data confirmed Powell’s comments. Key indicators showed a slowing in domestic prices and growth, while the economy remained strong. It was the “soft landing” Wall Street was hoping for.
November 1, 2023, kicked off a historic decline in mortgage rates. Over seven weeks, 30-year mortgage rates dropped from a 23-year high to a more manageable level for home buyers. As 2024 begins, mortgage rates are close to where they were a year ago.
The difference is perspective.
Last year, buyers were unhappy with mortgage rates at 6.25%. Today, those same rates feel more favorable.
Mortgage rates are expected to decrease in 2024, and buyers will likely pay fewer discount points. By summer, first-time home buyers may see mortgage rates near 4.25%, based on current trends.
Here are the reasons why:
Inflation is expected to no longer be a major factor in 2024.
Personal Consumption Expenditures, the Federal Reserve’s preferred inflation gauge, is down two-thirds from its mid-2022 peak. The Fed has weakened demand for goods and services through 11 consecutive rate hikes, raising the Fed Funds Rate from near zero to 5.25%. This allowed the supply chain to normalize post-pandemic.
This is the “soft landing” many have been hoping for.
The Fed concluded its final meetings of 2023 by acknowledging that inflation is slowing and approaching the 2% annual target. Discussions about when to cut the Fed Funds Rate have already started.
Inflation is not gone, but it is no longer the central concern.
Mortgage rates start 2024 on an 8-week win streak, the longest in 13 years.
During this time, the 30-year fixed-rate mortgage rate fell by more than 150 basis points, giving home buyers 16% more purchasing power.
Rates may drop further as mortgage markets stabilize.
In 2023, uncertainty and fear drove investors away from mortgage-backed securities (MBS), causing rates and fees to rise sharply. In 2024, Wall Street is returning to the MBS market, signaling confidence in a stable economic outlook.
Housing and mortgage activity will pick up in 2024. Mortgage rates could reach 4.25%, with rates in the 3s not out of the question.
As 2024 begins, Congress is considering several bills that would make homeownership more accessible and affordable for first-time buyers.
The bill with the most momentum is the HELPER Act, a 100% mortgage for teachers and first responders.
Introduced in May 2023, the HELPER Act (Homes for Every Local Protector, Educator, and Responder) has gained bipartisan support, with more than 100 co-sponsors in the House and 14 in the Senate.
Another bill gaining attention is the Downpayment Toward Equity Act, offering a $25,000 cash grant to first-time, first-generation home buyers.
Other bills under consideration in 2024 include:
Additionally, Congress has reintroduced the Biden $15,000 First-Time Home Buyer Tax Credit, modeled after the $8,000 credit from 2009. The updated bill allows buyers to apply the tax credit at closing to cover settlement costs and down payments.
Finally, the White House has floated a $10,000 first-time home buyer mortgage relief credit, which may be the easiest to pass as the tax code already exists. The bill could be introduced in 2024.
None of these bills are currently available until passed into law. In the meantime, buyers can explore low-down payment mortgages that help make homeownership more affordable.
Mortgage rate forecasts can guide your decision on whether it’s a good time to buy a home, but they cannot predict the future. Forecasts are based on data available at the time of publication.
Each year, an unexpected “market shock” event can change the course of mortgage rates. It’s impossible to predict what that event will be.
Here’s a list of surprise events from 2000-2023 that impacted mortgage rates and home affordability for first-time buyers.
| Year | Market Shock Event |
| 2000 | The Dotcom Bubble Burst |
| 2001 | 9/11 Terrorist Attacks |
| 2002 | Enron Corporate Scandal |
| 2003 | Iraq War |
| 2004 | 60% Surge In Oil Prices |
| 2005 | Hurricane Katrina |
| 2006 | Housing Market Weakens |
| 2007 | Financial Crisis Begins |
| 2008 | The Global Financial Crisis |
| 2009 | Economic Stimulus Plan |
| 2010 | Stock Market Flash Crash |
| 2011 | U.S. Credit Rating Downgrade |
| 2012 | The Fiscal Cliff |
| 2013 | Federal Reserve Tapering Plan |
| 2014 | Oil Prices Crash 45% |
| 2015 | China’s Economic Slowdown |
| 2016 | Brexit Uncertainty |
| 2017 | Tax Cuts and Jobs Act |
| 2018 | Turkey & Argentina Market Turmoil |
| 2019 | Global Economic Slowdown |
| 2020 | COVID-19 Pandemic |
| 2021 | Pandemic Recovery & Inflation |
| 2022 | Runaway Inflation |
| 2023 | Inflation Persists |
The data for our mortgage study was gathered from the Freddie Mac Primary Mortgage Market Survey, the Federal Reserve website, the FFEIC website’s Snapshot National Loan Level Dataset, and first-party Homebuyer.com data. The FFEIC Snapshot files contain national Home Mortgage Disclosure Act (HMDA) datasets, modified to protect applicant and borrower privacy.
Despite the thorough nature of HMDA data, our study required additional calculations to derive more complex mortgage statistics. Market share percentages and comparison figures required advanced mathematical calculations, which we queried using Google BigQuery and custom Python scripting.
To ensure the accuracy of our study, we relied on the robustness of the Freddie Mac and HMDA data, and the precision of our queries.
This study tracks the 30-year conventional fixed-rate mortgage and the home buyers that use it. We did not include the use of discount points in our mortgage rate forecast and tracking.
You may also be interested in our companion report, Generational Home Buyer Statistics, which lists more than 100 U.S. home buyer and homeowner statistics.
This section presents Freddie Mac Primary Mortgage Market Survey (PMMS) data from 2012 to 2023. The tables are arranged by month and year to highlight seasonal trends and patterns.
| 2012 | 2013 | 2014 | 2015 | |
| January | 3.91% | 3.34% | 4.53% | 3.73% |
| February | 3.87% | 3.53% | 4.23% | 3.59% |
| March | 3.90% | 3.52% | 4.28% | 3.75% |
| April | 3.98% | 3.54% | 4.41% | 3.70% |
| May | 3.84% | 3.35% | 4.29% | 3.80% |
| June | 3.67% | 3.91% | 4.14% | 3.87% |
| July | 3.62% | 4.29% | 4.12% | 4.08% |
| August | 3.55% | 4.39% | 4.14% | 3.91% |
| September | 3.55% | 4.57% | 4.10% | 3.89% |
| October | 3.36% | 4.22% | 4.19% | 3.85% |
| November | 3.39% | 4.16% | 4.02% | 3.87% |
| December | 3.34% | 4.46% | 3.89% | 3.93% |
| 2016 | 2017 | 2018 | 2019 | |
| January | 3.97% | 4.20% | 3.95% | 4.51% |
| February | 3.72% | 4.19% | 4.22% | 4.41% |
| March | 3.64% | 4.10% | 4.43% | 4.41% |
| April | 3.59% | 4.10% | 4.40% | 4.08% |
| May | 3.61% | 4.02% | 4.55% | 4.14% |
| June | 3.66% | 3.94% | 4.54% | 3.82% |
| July | 3.41% | 3.96% | 4.52% | 3.75% |
| August | 3.43% | 3.93% | 4.60% | 3.75% |
| September | 3.46% | 3.78% | 4.54% | 3.49% |
| October | 3.42% | 3.85% | 4.71% | 3.65% |
| November | 3.54% | 3.94% | 4.83% | 3.69% |
| December | 4.08% | 3.94% | 4.75% | 3.68% |
| 2020 | 2021 | 2022 | 2023 | |
| January | 3.72% | 2.65% | 3.22% | 6.48% |
| February | 3.45% | 2.73% | 3.55% | 6.09% |
| March | 3.29% | 3.02% | 3.76% | 6.65% |
| April | 3.33% | 3.18% | 4.72% | 6.28% |
| May | 3.26% | 2.96% | 5.27% | 6.39% |
| June | 3.18% | 2.99% | 5.09% | 6.79% |
| July | 3.07% | 2.98% | 5.30% | 6.81% |
| August | 2.88% | 2.77% | 4.99% | 6.90% |
| September | 2.93% | 2.87% | 5.66% | 7.12% |
| October | 2.88% | 2.99% | 6.66% | 7.49% |
| November | 2.78% | 3.09% | 6.95% | 7.63% |
| December | 2.71% | 3.11% | 6.49% | 6.75% |
This article, "2024 Mortgage Rates: A 4.25% Forecast," authored by Dan Green, is based on extensive professional mortgage experience and includes references to trusted sources such as industry-leading financial institutions and expert research from the following websites:
This article was last updated on September 22, 2024.
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