As we look ahead to 2024, mortgage rates continue to be a hot topic, especially for homebuyers and homeowners in Long Island’s Nassau and Suffolk Counties. The real estate market here is as dynamic as ever, and understanding how mortgage rates might change in the coming year is crucial for making informed decisions. Here’s a breakdown of what several key players in the mortgage industry are predicting for the average 30-year fixed-rate mortgage throughout 2024 and beyond.
Freddie Mac: Rates to Stay Elevated Through 2024
According to Freddie Mac’s July Economic, Housing, and Mortgage Market Outlook, mortgage rates are expected to remain relatively high for most of 2024. The central bank may approve a rate cut later in the year, but Freddie Mac projects that mortgage rates will stay above 6.5% until the end of 2024. It isn’t until 2025 that rates might dip below this threshold.
Fannie Mae: Slight Decline Expected in Late 2024
Fannie Mae forecasts a modest decrease in mortgage rates toward the end of 2024. They anticipate the average 30-year fixed mortgage rate to hover around 6.8% in Q3 2024 and slightly decrease to 6.7% in Q4. This downward trend is expected to continue into early 2025, with rates potentially reaching 6.5% in Q1 2025. For Long Island homebuyers, this suggests a marginally more favorable rate environment later in the year.
National Association of Realtors (NAR): Rates Averaging 6.9% in Q3
The National Association of Realtors has adjusted its previous forecasts, now predicting that the 30-year fixed mortgage rate will average 6.9% in Q3 2024. NAR expects rates to decrease slightly to between 6.5% and 6.7% by the end of the year. According to Lawrence Yun, NAR’s chief economist, buyers can anticipate moderately lower mortgage rates, increased home sales, and more stable home prices in the latter half of 2024.
Mortgage Bankers Association (MBA): Gradual Decline in Rates
The Mortgage Bankers Association projects that the 30-year fixed-rate mortgage will decrease as 2024 progresses, with an average of 6.8% in Q3 and 6.6% in Q4. MBA economists believe that this downward trend will extend into 2025, potentially lowering rates to 6.4% by Q1. This could provide a more favorable environment for Long Island homebuyers by early next year.
Palisades Group: Rates to Stay Above 6.25%
Jack Macdowell, managing member and chief investment officer at Palisades Group, remains cautious. He predicts that mortgage rates will stay above 6.25% through 2024, citing the market’s tendency to overestimate the Federal Reserve’s rate cuts. Macdowell expects at most one or two rate cuts in 2024, which would keep rates relatively high compared to recent historical norms.
RE/MAX: Rates to Decrease to 6.6% by Early 2025
RE/MAX co-founder Dave Liniger shares a similar outlook, predicting that mortgage rates will remain elevated for much of 2024. Liniger suggests that rates might only start to decrease once the Federal Reserve begins cutting rates, potentially dropping to around 6.6% by the end of Q1 2025.
HSH.com: Rates Between 6.6% and 6.9% Through September
Keith Gumbinger, vice president at HSH.com, anticipates that mortgage rates will average between 6.6% and 6.9% through September 2024. He notes that recent declines in mortgage rates may reflect market expectations that the Federal Reserve will soon begin cutting short-term rates, but more clarity will come after the September Fed meeting.
loanDepot: Rates Could Drop to Mid-6% Range
Jeff DerGurahian, chief investment officer and head economist at loanDepot, believes that the Federal Reserve could start cutting rates as early as September. If this happens, the 30-year fixed mortgage rate, which has been hovering around 7%, could fall to the mid-6% range by the end of 2024.
Federal Reserve’s Stance: What It Means for Mortgage Rates in 2024
In July 2024, the Federal Open Market Committee (FOMC) voted unanimously to keep the benchmark federal funds rate steady. This decision, the eighth consecutive hold, maintains the rate between 5.25% and 5.5%. While a rate cut is possible later in the year, the Fed’s cautious approach has kept mortgage rates elevated, with the 30-year fixed mortgage rate climbing to its highest levels in decades due to the Fed’s aggressive inflation control measures.
As inflation edges closer to the Fed’s 2% target, many experts expect at least one rate cut by September 2024. However, Federal Reserve Chair Jerome Powell has remained non-committal, indicating that any rate reduction will depend on further economic data.
Impact of Potential Rate Cuts on Mortgage Rates
If the Fed cuts rates in September, as some anticipate, don’t expect an immediate or significant drop in mortgage rates. Dr. Lisa Sturtevant, chief economist at Bright MLS, warns that prospective homebuyers hoping for a big reduction in rates might be disappointed, as the mortgage market may have already priced in the expected rate cut.
Despite this, BrightMLS predicts that mortgage rates will decline in the fall, possibly hovering around 6.4% by Q4 2024. Although home prices will likely remain high—especially for first-time buyers—an increase in inventory could offer more moderately priced options.
Is 2024 a Good Time to Refinance?
Deciding whether 2024 is a good time to refinance depends on various factors, including potential Fed rate cuts and the rate on your current mortgage. Homeowners who secured mortgages during the record-low rates of 2020 and 2021 may find refinancing less attractive in 2024, as rates are unlikely to dip below their current levels.
However, for the approximately two million homeowners with mortgage rates above 7%, refinancing could be a smart move if rates drop into the mid-6% range. Experts believe that refinancing volume will increase if the Fed cuts rates, particularly for those looking to reduce their monthly payments.
Current Mortgage Rate Trends on Long Island
Long Island’s real estate market, particularly in Nassau and Suffolk Counties, remains competitive despite elevated mortgage rates. While refinance activity has seen fluctuations, the potential for lower rates in late 2024 could spur more refinancing and purchasing activity.
Although rates are cooling slightly, they remain well above the pandemic-era lows. This has led to a mix of opportunities and challenges for Long Island homebuyers and homeowners. For those looking to refinance or purchase a home, staying informed about rate trends and exploring options like assumable mortgages or lender comparisons could yield significant savings.
Looking Ahead: Mortgage Rates and Long Island’s Real Estate Market
The outlook for mortgage rates in 2024 suggests a slow but steady decline, with rates likely staying in the mid-6% range by year’s end. For Long Island residents, this means that while rates may not return to their pandemic lows, there could still be opportunities to secure favorable financing or refinancing terms, especially with the potential for increased inventory and stabilizing home prices.
As always, Long Island homebuyers should work closely with knowledgeable real estate professionals and lenders to navigate the market effectively. With the right strategy, 2024 could be a year of opportunity for those looking to buy or refinance in Nassau and Suffolk Counties.