Will Mortgage Interest Rates Go Lower in 2024?

Dated: February 18 2024

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While many potential homebuyers have been knocked out of the market by higher mortgage interest rates and home prices, there’s hope on the horizon that they’ll have better luck in 2024.

According to Freddie Mac, banks are tightening their lending standards due to increases in credit card and car loan delinquencies. This is also impacting mortgage applications, credit lines and refinance activity - loan originations were down approximately 30% in October 2023 from the previous year.  The good news is that mortgage delinquencies are low compared to other loan types.  Inflation is waning but still remains above the Federal Reserve’s target of 2%. Consumer spending will decelerate due to slower economic and weaker employment growth which will cause rates to come down in 2024. Continuing homebuyer demand will keep home prices elevating by 2.6% in 2024, but with rates dipping as low as 6%, housing will be a little more affordable.

If you’re planning to buy a home in 2024, Lending Tree recommends you save at least 3% towards the down payment for a conventional loan. If you have less than 20% down, expect to pay for private mortgage insurance (PMI) between 0.14% and 2.33% of your loan amount in annual PMI premiums. To get the best interest rate and lower PMI premiums, your credit score must be at least 780 or higher, or you’ll pay a higher interest rate.

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