Here's the mortgage interest rate forecast for fall 2024

Over the past couple of years, Americans dealt with persistent inflation in the U.S. economy. In an effort to keep inflation at bay, the Federal Reserve raised its benchmark rate several times — and now it remains near a 23-year high. As a result, this increased the interest rates for many consumer loans, including mortgages, making it too expensive for many people to buy a home.

While mortgage rates remain relatively high — today's average 30-year mortgage rate as of August 19, 2024, is 6.57%, which is significantly higher than the pandemic-era lows of below 3% rates, mortgage rates have started to decline a little in recent months. And the Fed might cut rates soon, which could lead to even lower mortgage rates. 

That said, in today's unusual economic environment, there are other factors that could also impact mortgage rates, such as the health of the economy. Bad news for the economy can be good news for mortgage rates, says Melissa Cohn, regional vice president at William Raveis Mortgage. With that in mind, where are mortgage interest rates heading this fall? We asked some experts for their predictions.

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What's the mortgage interest rate forecast for fall 2024?

Here's what some experts think could happen to mortgage rates this fall:

Mortgage rates will gradually decline

Many experts we interviewed believe mortgage rates will gradually decline this fall. With the Fed expected to cut rates for the first time at its September meeting, some think that this event may already be priced in.

"If economic data continues to show the economy is cooling off and inflation is getting under control, then most economists expect the Fed will begin a series of rate cuts, which will cause mortgage rates to gradually decline," says Rob Cook, Vice President of Discover Home Loans. 

Cook says If the Fed takes action by cutting rates in September, that will likely have a positive impact on mortgage rates. However, according to him, rates aren't expected to fall by that much because the market has already assumed the Fed will do so, which has resulted in a recent slight decline in mortgage rates.

Jeff Tucker, principal economist at Windermere Real Estate, has similar thoughts.

"No one has a crystal ball for mortgage rate movements, but I think rates will continue to modestly decline, in a two-steps-down, one-step-up pattern, thanks to cooling inflation and a softening labor market," says Tucker.

These trends and the predicted start to rate cuts by the Fed are common knowledge, according to Tucker. So, to some extent, they have already been priced in – that's why interest rates fell almost half a point in the last couple of months, Tucker says.

Cohn also thinks mortgage rates will drop this fall.

"I think that the general direction of mortgage rates will be downward as we head into the fall," says Cohn. Her reason for believing this is that economic data has shown that inflation continues to cool and is moving closer toward the Fed's target 2% rate.

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How far might rates drop this fall?

If you plan on purchasing a home soon, you may wonder just how low rates could drop in the fall if the Fed cuts rates. Tucker says he doesn't know precisely but thinks we could see mortgage rates between 6% and 6.5% this fall. "Below 6% sounds like a long shot, and if I had to get more precise, I think somewhere around 6.25% is reasonable," says Tucker.

Is now a good time to purchase a home?

Whether purchasing a home now is a smart move — or waiting for rates to potentially drop —  depends on your unique financial situation. Before you take out a mortgage, review your budget to determine how much home you can afford.

"The decision to wait (or not) for home loan rates to drop largely depends on the consumers' individual situation," says Cook.

That said, there are benefits to locking in a mortgage interest rate now if you're financially prepared to buy a home. For example, locking in a fixed mortgage rate now protects you against future rate increases. Cohn believes if you lock in a rate now, you could have less competition in the future.

"As rates drop, more buyers will come into the market, and prices will rise," says Cohn. In turn, she thinks buyers are much better off paying less for a home and then refinancing when rates bottom out in the future.

The bottom line

Mortgage rates seem to be headed downward this fall, according to experts, but no one knows how far they'll drop. As a result, many experts think you should focus more on your budget and take steps to prepare for homeownership regardless of what happens with mortgage rates. 

"National [mortgage rate] trends can be helpful for knowing if the tide is coming in or going out, but a knowledgeable local real estate agent is irreplaceable when it comes to navigating the particulars of your local market and finding the best deal on the perfect home," says Tucker.

If you decide to purchase a home now and mortgage interest rates drop after you buy, Cohn says to remember that you can always refinance.