Just the mere idea of mortgage rates moving lower in the near future may have a significant impact on the housing market in 2024, influencing both prospective homebuyers and current homeowners.
“Generally speaking, people are optimistic that the rates are coming down,” said Eldad Moraru, a real estate agent with Compass Real Estate.
Mortgage rates play a role in shaping the affordability of homes, making fluctuations in interest rates a critical factor in the overall health of the housing market. Lower rates make homeownership more accessible by reducing the cost of borrowing and expanding the pool of qualified buyers.
If mortgage rates do continue going down, there will likely be a surge in demand from potential homebuyers.
According to a new report from Fannie Mae, 31% of consumers think that mortgage rates will go down over the next 12 months.
“People are looking for them to come down enough,” Moraru said. “People want to move or need to move, so they just need the rate to be at an acceptable level, and that means different things for different people.”
The report showed that 31% of consumers expect mortgage rates to rise, while 36% believe they’ll remain where they are now.
Conventional 30-year fixed-rate mortgage rates are around 6.6% currently, down from nearly 8% in November of last year.
Lower rates, or the belief that rates will soon be going down, could generate more interest among people thinking of buying a house. It could also be the deciding factor for homeowners who have wanted to sell their home, but did not want to give up their current, relatively low mortgage rate.
“We’re seeing more inventory that’s going to be coming on the market soon,” Moraru said.
That would be good news for the market overall, as inventory has been low, with people hanging on to their homes and their low rates.
As prospective homebuyers look ahead to potentially lower rates this year, they may pull the trigger on a house even before rates drop significantly, anticipating that one day they will refinance.
“A lot of people realize if the rate is good enough, ‘let’s do the move now’ and take advantage of a better rate down the road by refinancing,” Moraru said. “You marry the price, but you date the rate.”
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