Mortgage Rates in 2024: Hopes and Hurdles in a Complex Landscape

In 2024, despite hopes for lower mortgage rates, a resilient economy and delayed Fed cuts led to fluctuating rates, ending the year around 7%.

For professionals within the housing sector, 2024 unfolded as a year of disappointment.

Many had optimistic expectations for a decline in mortgage rates, driven by anticipated Federal Reserve interest rate cuts.

However, a robust economy and a cautious stance from the Fed delayed those cuts until September, leading to an unexpected rise in mortgage rates.

Market Developments

Before the Federal Reserve initiated its first rate cut, the bond market had already adjusted, resulting in a significant drop of nearly two percentage points in mortgage rates from their peak of 8% in October 2023.

As autumn arrived, mortgage rates tantalizingly approached the desirable 6% mark at several points, sparking a brief resurgence in demand and granting the housing market a short-lived boost.

Regrettably, the complexities introduced by the election cycle further impacted mortgage rates, which hovered around 7% by year’s end.

This scenario can be described as neither disastrous nor entirely positive; rather, it reflects the mixed sentiments of the current market climate.

Expert Insights

Lead Analyst Logan Mohtashami offered insight into the fluctuating perspectives surrounding mortgage rates throughout 2024.

Many expected rates to drop below 6%, yet the bond market held firm at key levels.

He drew a parallel with a character from Game of Thrones, illustrating how the bond market remained steadfast during pivotal moments, resulting in yet another year without rates falling beneath the 6% threshold.

HousingWire’s newsroom provides consistent coverage on mortgage rates, with updates several times a week.

Among these updates is Mohtashami’s Housing Market Tracker, released every Saturday.

This tracker includes essential metrics such as the 10-year yield, trends in mortgage rates, housing inventory, sales activity, and pending contracts.

Key Moments of 2024

Throughout the year, Mohtashami observed that mortgage rates remained within a predictable range.

When signs of weakness emerged in economic and labor data, both bond yields and mortgage rates fell.

In contrast, when the outlook improved, rates rose accordingly.

This pattern mirrored the behavior seen in 2023, where lower economic data often coincided with declining mortgage rates.

For rates to remain low moving forward, either the economy must continue to underperform, or mortgage spreads should revert to more standard levels.

  • On September 18, the Federal Reserve made a significant interest rate cut of 50 basis points.
  • A day later, September 19, analysts reflected on the puzzling rise in mortgage rates following the Fed’s cut.
  • By September 22, the possibility of reaching the lowest mortgage rates of the year was examined.
  • On October 16, mortgage rates hovered close to 6.5%, sparking speculation about their future stability.
  • Following Trump’s election win on November 6, concerns began surfacing about the potential for mortgage rates to escalate to 8%.
  • On November 26, a report indicated that mortgage rates had surpassed 7%, leading to discussions about potential relief measures.
  • December 18 saw comments from Powell instigate a spike in mortgage rates.

As we look forward to 2025, we invite readers to explore HousingWire’s 2025 Housing Market Forecast.

Additionally, don’t miss the upcoming Housing Economic Summit on February 26, where esteemed housing economists will share valuable perspectives for the year ahead.

Source: Housingwire