After mortgage rates took a dramatic drop at the end of the year, many are wondering just how low they'll go in 2024.
Thirty-year mortgage are currently in the mid-6% range, where they fell in late December after hitting a more than 20-year high around 8% in the fall.
"Markets continued to digest the impact of slowing inflation and potential rate cuts from the Federal Reserve, helping mortgage rates to stay at levels close to the lowest since mid-2023," Joel Kan, vice president of the Mortgage Bankers Association, said in a statement. "The recent decline in rates has given the housing market some cause for optimism going into 2024."
While most experts agree that mortgage rates will drop even further in 2024, the strength of the economy and inflation both play a large role in just how low they'll go.
"The rate momentum is as good as the trajectory of economic data. So if the data continues to do what it has been doing, there's no reason rates couldn't go down into the 5's, possibly even the high 4's if some of the talking heads are right about recession in 2024," Matthew Graham, chief operating officer of Mortgage News Daily, told CNBC.
Either way, the lower rates have homebuyers feeling more optimistic about the new year. According to Fannie Mae's December National Housing Survey, a survey-high 31% of consumers said they expect mortgage rates to go down in the next 12 months -- up from 22% in November. It's the first time in the survey's history that more homeowners believe mortgage rates will go down than go up.
"A more optimistic rate outlook among consumers may signal an expectation that home affordability pressures will ease in 2024," Mark Palim, vice president at Fannie Mae, said in a statement. "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."
Of course, that's likely dependent on the extent to which mortgage rate expectations are met with actual mortgage rate declines.
"Like many others, even if rates fall further, we continue to believe that affordability will be tempered in part by elevated home prices, especially for first-time homebuyers, and we expect the pace of home sales improvement to be modest in 2024," Palim said.