When will mortgage rates go down?

It may feel like ancient history, but there was a time in the recent past when mortgage interest rates hovered near record lows. During the height of the pandemic in 2020 and 2021, interest rates plummeted, giving homebuyers a historic opportunity to secure a low rate on their mortgage. Existing homeowners were also able to take advantage, securing refinance rates of around 3% or less. 

Things have changed significantly since that point, however.

In an attempt to cool high inflation, the Federal Reserve has since raised the benchmark interest rate multiple times, and it now sits at a range between 5.25% to 5.50%. That's the highest it's been in 22 years. As a result, mortgage rates have increased to the highest level since 2000. That said, recent success in the fight against inflation indicates that the aggressive rate hikes we have seen in the last year and half, approximately, may be coming to an end. In fact, the Fed has elected to keep rates untouched in their last two meetings. 

So what does all this mean for mortgage rates — and when can consumers expect them to drop? Start by exploring your mortgage rate options here to see what rate you could qualify for.

When will mortgage rates go down?

Before mortgage interest rates fall, they'll have to stop rising. Fortunately, that's what many experts predict for the December Fed meeting. If they do, it'll mark the third pause in hikes in recent months (the Fed didn't raise the benchmark rate in June, either). This will have the effect of keeping mortgage rates relatively steady. When they will go down, however, is more difficult to predict.

"As the Fed continues to battle inflation and gets closer to their 2% goal, mortgage rates should respond positively to the stabilization and begin slowly decreasing in early 2024. My prediction is that we see rates around 6.5% in Q1 of 2024 and 5% in Q4," Brian Shahwan, vice president and mortgage banker at William Raveis Mortgage, recently told CBS News.

"Looking into the crystal ball, I see mortgage rates heading down over the next six to 12 months, with some volatility accompanying this downward trend," Mike Hardy, managing partner at Churchill Mortgage, told CBS News in September. "I think 30-year rates will be in the ballpark of 5.25% and 15-year rates to be around 4.875% a year from now."

Mortgage rates are dependent on the Federal Reserve's actions (or lack thereof), which are dependent on the progress toward lowering inflation. Until the fight against inflation is won, the Fed is unlikely to loosen rates, and the price of borrowing is likely to stay elevated.

Not sure what mortgage rate you'd qualify for? Find out here now.

Should you get a mortgage now?

With today's mortgage rates hovering around 7.66%, many have elected to sit on the sidelines. Compared to the much lower rates that could've been secured just a few years ago, some feel that now isn't the time to get a mortgage. For others, however, it may be. Here are two reasons why it may still be worth acting now:

• Rates could go even higher: Sure, today's rates aren't most buyers' idea of a bargain. But if rates increase in December or in 2024, today's "high" 7.66% rate could be tomorrow's "low" alternative. Time your mortgage application accordingly.
• You may lose out on your dream home: Many experts suggest a "date the rate, marry the home" approach. In other words, don't let today's rates discourage you if your dream home suddenly goes on the market. Buy it anyway and "date the rate" for now. Mortgage rates will eventually fall at some point, at which time you can refinance to the prevailing lower rate. But, if you wait, you may lose the opportunity to own your dream home forever.

The bottom line

Mortgage rates may be high now but they may not stay there long-term. With a pause in rate hikes seemingly the new norm, the worst pain for mortgage rates could be over. And while they're unlikely to hit that 2020-2021 range anytime soon, it doesn't mean that buyers should automatically discount acting now either. There are multiple compelling reasons to do so. Start by exploring your mortgage rate options today to learn more.