If We Only Had A Crystal Ball!

The Federal Reserve Bank did not raise interest rates on 09/20/2023, but many experts believe that it will do so soon to combat inflation. What does this mean for the mortgage interest rates for the remainder of 2023 and 2024? Here are some predictions and insights from various sources.

According to Forbes Advisor, mortgage rates have soared to their highest levels in decades, reaching 7.23% in August 2023 for the average 30-year fixed-rate mortgage. This is due to the Fed’s aggressive rate hikes and its intention to keep raising rates until inflation falls to its 2% target. The article cites several economists who expect mortgage rates to remain above 6.5% for the rest of the year, and possibly decline slightly in 2024 if inflation cools down.

U.S. News also reports that mortgage rates have stayed higher for longer than expected, and that they are unlikely to fall dramatically in the coming months. The article provides forecasts from different organizations, such as Fannie Mae, the Mortgage Bankers Association (MBA), Wells Fargo, and the National Association of Realtors (NAR). Fannie Mae predicts that the 30-year mortgage rate will average 6.6% in 2023 and 6.1% in 2024, while NAR expects it to fall to 6.4% by the end of 2023 and 6% in 2024. The MBA has a more optimistic outlook, forecasting that the 30-year mortgage rate will drop to 5.9% by the end of 2023 and below 5% by the end of 2024.

MSN also cites Fannie Mae, NAR, and MBA’s forecasts, and summarizes them as follows: “Fannie Mae’s forecast suggests that 30-year mortgage rates will fall into the 6% to 6.5% range in 2023, while NAR believes rates will stick closer to 6%. The MBA forecast sees rates falling more aggressively, predicting that 30-year mortgage rates will drop to 5% by the end of 2024.”

As you can see, there is no consensus on where mortgage interest rates are headed in the next two years, but most sources agree that they will remain high or even rise further in the short term, before potentially easing down in the long term. If you are planning to buy or refinance a home, you may want to keep an eye on the Fed’s actions and statements, as well as the inflation data and other economic indicators that could influence mortgage rates.

Background on the Fed:

The Federal Reserve Board (the Fed) controls the federal funds rate and discount rate, which are charges for overnight loans from bank to bank or from the Fed to member banks.

The Fed has a standing goal to maintain inflation within a 2% range. Over the last year, they hoped to slow spending and inflation by making borrowing more expensive.

The rate was lowered to near zero in March 2020 in response to the pandemic. These historic measures are now being reversed.

The Fed raised rates for 11 of the last 13 meetings, with pauses in July and September. The mid-range benchmark borrower cost is currently at its highest level since 2001.

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Sources of information:

https://www.forbes.com/advisor/mortgages/mortgage-interest-rates-forecast/

https://money.usnews.com/loans/mortgages/mortgage-rate-forecast

https://www.msn.com/en-us/money/realestate/will-mortgage-rates-go-down-in-2024/ar-AA1gLm6I