US Mortgage Rates Are Falling: What You Need to Know
Published On: September 23rd, 2024
As of September 2024, mortgage rates in the US remain elevated but have recently started showing signs of easing, offering some hope to prospective homebuyers. Rates for 30-year fixed mortgages currently hover around 5.7%—a slight decrease from the highs of last year when rates approached 8%. Although these rates are higher than the pre-pandemic era, experts predict a downward trend throughout the rest of the year due to the Federal Reserve’s ongoing rate cuts.
- Current 30-year mortgage rate: ~5.72%, down from 6.05% in August 2024
- Current 15-year mortgage rate: ~5.12%, compared to around 5.6% last month
- Mortgage rates peaked: At nearly 8% in late 2023
- Expected rate cut: More reductions are anticipated through the end of 2024 and into 2025
Mortgage rates surged throughout 2023 as the Federal Reserve raised interest rates to combat inflation. By late 2023, rates for 30-year mortgages approached 8%, the highest in over two decades. However, as the Fed begins to reduce its key interest rate, mortgage rates are starting to ease slightly. The recent decrease in rates is attributed to a combination of the Fed’s monetary policy and slight improvements in the labor market.
The housing market remains constrained by low inventory, with many homeowners hesitant to sell their properties due to high mortgage rates on new loans. The tight supply of homes, coupled with still-elevated mortgage rates, has kept prices high, making homeownership increasingly difficult for many Americans.
What this means for homebuyers and the economy
Prospective buyers may benefit from declining mortgage rates, though the relief is gradual. According to experts, rates are unlikely to dip significantly below 5% until 2027, meaning that affordability challenges will persist for some time. As rates inch lower, more homeowners may consider selling their properties, which could help alleviate the supply shortages that have plagued the market since the pandemic.
At the same time, refinancing is becoming more attractive for current homeowners locked into higher-rate mortgages. Those with mortgages above 6% may now find it worthwhile to refinance, lowering their monthly payments and freeing up disposable income that could benefit the broader economy.
In conclusion, while mortgage rates are showing signs of easing, the path to substantial affordability remains a long one. Current and prospective homeowners should continue monitoring economic conditions and make informed decisions based on their financial situations. The Federal Reserve’s actions and broader economic factors like the labor market will continue to influence mortgage rates in the coming months.