Nearly a third of Americans expect mortgage rates to fall in 2024
A growing number of American expect mortgage rates to fall this year.
According to a new survey from Fannie Mae, as of December some 31% of consumers think that borrowing costs for home loans will decline over the next 12 months, a more optimistic outlook than the previous month. The same percentage of respondents expect mortgage rates to rise, while 36% believe they'll hover around their current level.
"Notably, homeowners and higher-income groups reported greater rate optimism than renters," Mark Palim, deputy chief economist at Fannie Mae, said in a statement. "In fact, for the first time in our National Housing Survey's history, more homeowners, on net, believe mortgage rates will go down than go up."
The rate on a conventional 30-year fixed-rate mortgage is 6.62%, down from nearly 8% in November, according to Fannie Mae.
See Managing Your Money for more on how mortgage rates are likely to fare in 2024.
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For aspiring homeowners, as well as sellers and those looking to refinance, the big question for 2024 is how low mortgage costs could go. Federal Reserve officials indicated in December they could cut their benchmark rate three times this year. Most real estate experts think rates will remain in the 6% range, according to Realtor.com.
Although mortgage rates don't necessarily mirror the so-called federal funds rate, they tend to track the yield on the 10-year U.S. Treasury note, which is affected by the Fed's monetary policy moves. Investor expectations for future inflation and global demand for Treasurys also influence rates on home loans.
If more Americans are optimistic about falling mortgage rates, they remain distinctly sour on the prospects of buying a home. Only 17% of consumers polled by Fannie Mae think it's a good time to buy a house. As of November, the median price of a home in the U.S. topped $408,000, up 3.6% from the previous year, according to Redfin.
Still, even modestly higher expectations for lower rates could encourage sellers to put their homes on the market, Palm said.
"Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it's both a bad time to buy and sell a home, and so a more positive mortgage rate outlook may incent some to list their homes for sale, helping increase the supply of existing homes in the new year," he said.
Many housing experts also project mortgage rates will dip this year.
"Mortgage rates will almost certainly be much lower this year," Thomas Ryan, a property economist at Capital Economics, said in a January 5 report. "That's likely to bring more supply onto the market, as mortgage rate 'lock-in' unwinds."
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- Mortgage Rates
Alain Sherter covers business and economic affairs for CBSNews.com.
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