May Mortgage Outlook: Slipping Downward - NerdWallet (2024)

FAQs

Will mortgage rates go down in 2023 or 2024? ›

These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.

Current Refinance Rates for May 2023

15-year fixed: 6.57% 30-year jumbo: 7.27% 5/1 ARM: 5.71%

“We expect that 30-year mortgage rates will end 2023 at 5.2%,” the organization noted in its forecast commentary. It since has walked back its forecast slightly but still sees rates dipping below 6%, to 5.6%, by the end of the year.

So far in 2023, the Fed raised rates 0.25 percentage points twice. If they hike rates at the May meeting, it is likely to be another 0.25% jump, meaning interest rates will have increased by 0.75% in 2023, up to 5.25%.

30-Year Mortgage Interest Rate Projected Forecast 2025. The 30 Year Mortgage Rate will continue to rise further in 2025. The 30 Year Mortgage Rate forecast at the end of the year is projected to be 16.25%.

30-Year Mortgage Rate forecast for December 2024. Maximum interest rate 4.52%, minimum 4.21%. The average for the month 4.33%. The 30-Year Mortgage Rate forecast at the end of the month 4.39%.

According to MBA, mortgage rates will conclude in 2023 at roughly 5.4%. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage is currently 6.94%.

The Fed penciled in a 5-5.25 percent peak interest rate for 2023, after which officials see rates falling to 4.25-4.5 percent by the end of 2024.

An interest rate forecast by Trading Economics, as of 12 May, predicted that the Fed Funds Rate could hit 5.25% by the end of this quarter - a forecast that has been materialised. The rate is then predicted to fall back to 3.75% in 2024 and 3.25% in 2025, according to our econometric models.

"Possibly in 2024, but it will depend on the Fed's decisions about raising rates in the second half of the year," says Fleming. "And even if they do go down, it won't be back to the rates of yesteryear. 6% mortgage rates used to be normal, and that's more reasonable to expect too."

What will 30 year mortgage rates be in 2023? ›

McBride expects rates to fall more consistently as the year progresses. "Thirty-year fixed mortgage rates will end the year near 5.25%," he predicts.

'I believe by the end of 2023 we will see rates start to fall with a target of between 2.5 to 3 per cent in 2024. 'I believe if the base rate can get back to circa 2.5 per cent, then we will see rates hovering around that mark with a return to products that have not been seen in the mortgage industry for some time.'

1) Interest-rate forecast.

We project a year-end 2023 federal-funds rate of 4.75%, falling below 2.00% by mid-2025.

Fannie Mae: Economists at Fannie Mae, which was chartered by the U.S. Congress in 1938 to provide affordable mortgage financing, project that the 30-year fixed mortgage rate will average 6.5% in 2023 and 5.9% in 2024.

Other experts agree that rates will likely come down in the next few years. Even so, we're unlikely to see the low rates we saw in 2021. “Interest rates are currently at a 15-year high, so it's difficult to envision this lending environment as going …

However, with the economy expected to cool and possibly dip into a recession, many recent forecasts expect rates to drop to 6% or below in 2024, including a Fannie Mae projection of 5.2%.

However, with the economy expected to cool and possibly dip into a recession, many recent forecasts expect rates to drop to 6% or below in 2024, including a Fannie Mae projection of 5.2%.

A “good” mortgage rate is different for everyone. In today's market, a good rate could be 6% for one borrower and 8% for another on the same day. To understand what a good mortgage rate looks like for you, get quotes from a few different lenders and compare them.

When the economy is doing well, borrowers can afford more. This affects the market for mortgages, which results in slightly rising rates. Conversely, when the economy declines and unemployment rates increase, interest rates fall to make it more affordable for borrowers to take out loans.

When was the last time interest rates were 5? ›

Mortgage rates steadily declined from 8.05% in 2000 to the high-5% range in 2003.

Experts seem to agree that the Fed is unlikely to raise rates again in June.

U.S. housing: Active listings up 15.4% year-over-year as demand grows. Yahoo Finance Live's Rachelle Akuffo breaks down the chart of the day. A year ago, Americans were right on the nose predicting where mortgage rates would be 12 months later. If they are right again, rates should surpass 8% by this time in 2024.

Is a 3.5% interest rate good? In today's climate, 3.5 percent interest on a mortgage is below average.

The 30-year mortgage rate dropped to a new historical low of 2.68% by December of 2020. In 2021, mortgage rates hovered between 2.70% and 3.10%, which gave many borrowers the chance to refinance or purchase properties at the lowest rates on record.

While real interest rates can be effectively negative if inflation exceeds the nominal interest rate, the nominal interest rate is, theoretically, bounded by zero.

Despite nearly stalling in April, inflation is expected to decline to 4.41% in May, according to the Cleveland Fed's Inflation Nowcast modeling. Similarly, inflation is expected to ease back down to 2.6% by 2024, according to 37 forecasters surveyed by the Federal Reserve Bank of Philadelphia.

So to summarize, mortgage rates are going up because the Fed has been raising the base interest rate. A higher base rate means banks pay more in interest, which they then need to pass on to their customers to maintain their margins.

In December of 2022, the Fed indicated that it expects the funds rate to fall to 4.1% by the end of 2024 after reaching the 5.1% mark by the end of 2023. If that holds true and the federal interest rate begins to fall, auto loan rates should start to drop shortly after.

"Returning to mortgage rates of 3% or 4% is not going to happen, in my view," says Yun, who points out that historically rates have been higher. The low rates of 2020 and 2021 were "unique" and those that got them were "lucky," he says.