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Mortgage Rates Expected To Continue To Drop in 2024

Estimated reading time: 4 minutes

After reaching their highest levels since 2000 last October–around 8%–interest rates for 30-year fixed-rate mortgages have settled lower and are expected to continue to go down. Here’s a quick look at industry forecasts and two financing options that can lower a mortgage rate, regardless of market changes.

What are mortgage rate predictions for 2024?

Many economists are expecting 30-year fixed mortgage rates to stay in the 6–7% range throughout 2024. If that holds, it will mirror most of 2023, but the silver lining is the expectation rates will also fall:

  • In their February Mortgage Finance Forecast, the Mortgage Bankers Association (MBA) predicted that 30-year fixed rates will drop from an average of 6.9% in Q1 2024 to 6.1% by Q4. In all, they’re projecting a 0.3% decline each quarter.
  • Fannie Mae’s February forecast predicts that rates will drop from 6.5% in Q1 to 5.9% by Q4. They suggest there will be a 0.2% decline per quarter.
  • Jessica Lautz, deputy economist for The National Association of REALTORS®, has stated “rates may come down to the low 6% range in the middle to later part of the year.”

All that said, predictions are subject to change and calculations for each source vary based on the data and standards they use. If you’re in the market for a mortgage this year, be sure to check rates regularly.

How much does 0.5% or 1% save on a mortgage?

If the 30-year fixed rate drops as predicted, it could translate into sizeable savings compared to recent highs. A 0.5% or 1% drop can turn into tens of thousands of dollars of interest savings.

Here’s a look at the potential savings on a 30-year fixed rate mortgage on a $400,000 home with a 20% down payment.

Interest Rate7%6.5%6%
Mortgage payment* (principal & interest only)$2,128.97$2,022.62  $1,918.56
Cumulative interest$446,428.47$408,142.36  $370,682.20
Total savings compared to 7%$38,286.11$75,746.27

*Note: These estimates do not include costs for homeowners insurance and taxes, which can add hundreds of dollars to a mortgage payment each month.

What’s the best strategy for a lower mortgage rate in 2024?

Everyone’s financial situation is different, but two options that can lower a mortgage rate, regardless of market conditions, are temporary mortgage buydowns and discount points. Mr. Cooper offers both.

  • Temporary mortgage buydowns: A temporary mortgage buydown discounts a homebuyer’s interest rate for a set period—usually 1–3 years. As a bonus, their cost is usually paid by a home’s seller, builder, or lender, such as  Mr. Cooper’s Mortgage Markdown program.* They can save a typical homebuyer thousands of dollars on a mortgage.
  • Discount points: Discount points reduce a mortgage’s rate permanently and can apply to a home purchase or refinance. They usually cost about 1% of the loan to reduce a rate by 0.25%.

To learn more about your options in 2024, talk to a Mr. Cooper mortgage pro at 833-702-2511, or get started online!

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* Mr. Cooper® Mortgage Markdown Terms and Conditions

Mr. Cooper’s Mortgage Markdown is a temporary buydown program that reduces the borrower’s effective interest rate and effective monthly payment for a one year period of time by establishing a custodial escrow account, which will be funded partially by the lender and partially by the borrower (in the case of a VA loan the account will be funded entirely by the lender), and funds will be dispersed from the escrow account to cover the difference in interest during the one year buydown period which subsidizes the monthly payment amount. Mortgage Markdown is available for purchase loans that are locked by 06/30/2024. Mortgage Markdown is only available on purchase loans for primary residences. Not available on jumbo loans, second mortgages, or refinance transactions. Offer may not be redeemed for cash or credit and is nontransferable. Offer cannot be retroactively applied to any loans. This offer is subject to changes or cancellation at any time at the sole discretion of Mr. Cooper. Additional restrictions/conditions may apply. Offer is contingent on qualification per full underwriting guidelines.