As summer 2024 approaches, many potential homebuyers are closely watching mortgage rates, hoping for a decrease that could make purchasing a home more affordable. However, the outlook for a significant drop in mortgage rates remains uncertain. This article explores what experts are saying about the potential for mortgage rates to decrease this summer and beyond.
The Current State of Mortgage Rates
Despite earlier predictions that mortgage rates would start to fall in 2024, inflation has remained persistently high, influencing the Federal Reserve’s decisions. The latest Consumer Price Index (CPI) data shows an annual inflation rate of 3.4%, which has led the Fed to maintain the federal funds rate at its current level since July 2023. Although the Fed does not directly control mortgage rates, its policies can influence the broader economic environment, keeping mortgage rates in the low 7% range for a 30-year fixed-rate mortgage.
Given these high rates, many prospective buyers are waiting for a more favorable time to purchase a home. But will mortgage rates drop this summer, or will buyers need to wait longer for relief?
Potential for a Summer Drop in Mortgage Rates
Some experts believe that mortgage rates could decrease slightly this summer, although significant drops are unlikely. According to Brian Shahwan, VP mortgage banker at The Melissa Cohn Group, mortgage rates might dip slightly due to weekly economic data rather than any major moves from the Fed. He suggests that buyers should work with lenders who offer rate-lock or float-down options, which allow them to take advantage of any temporary decreases in rates before closing.
Additionally, increased homebuying demand during the summer could lead to a slight reduction in mortgage rates as lenders compete for business. However, this effect is expected to be minimal. Tai Christensen, co-founder and president of Arrive Home, agrees that any rate decreases this summer will likely be marginal and advises borrowers to anticipate rates remaining relatively steady.
Why a Significant Drop Might Not Happen Until Later
While there is a possibility of minor rate decreases this summer, many experts, including Christensen, predict that more substantial declines in mortgage rates will occur later in the year. She expects mortgage rates to gradually decrease through the end of 2024, potentially reaching the mid-6% range if the Federal Reserve is satisfied with the progress on inflation.
Similarly, Brian Durham, VP of risk management at Realty Group LLC, is not optimistic about a significant drop in mortgage rates this summer. He forecasts that rates will remain steady during the summer and may trend downward towards the end of 2024, possibly dipping into the low-to-mid 6% range.
Josh Jampedro, a mortgage expert at Home Loan Advisors, echoes this sentiment, noting that economic changes often take time to impact interest rates. He anticipates that a more noticeable decrease in mortgage rates may not occur until late 2024 or early 2025, once the effects of economic shifts become more apparent.
The Bottom Line
While there may be slight fluctuations in mortgage rates this summer, experts generally agree that significant decreases are unlikely before the end of 2024. For potential homebuyers, this means that waiting for a major drop in rates may not be necessary, especially if they find a home that meets their needs now. However, those who can afford to wait might benefit from more favorable rates later in the year or early next year.
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