How will interest rates trend in 2024?

Question

On a recent episode of On The Market we have heard some of the best news all year for the economy and the housing market around inflation and interest rates. Today, Freddie Mac reports 30 year fixed mortgage rates at 7.22%. How do you see interest rates trending in 2024?

If you anticipate a big change in interest rates, what factors do you believe will drive this change?

Matt Myre · Answer

In all fairness to the unpredictability argument, the Fed had data showing massive spikes of inflation in 2021 while also knowing that the US government had injected trillions of dollars of stimulus into the economy during the pandemic but decided to pass it off as "transitory" due to "supply chain shocks" (not wrong, but wildly overblown). Inflation reached 9% before Powell made consistent moves. The bottom line is that the Fed is always hard to predict despite the data. If they were following the data in the way you're suggesting, then they would have started increasing rates far sooner than March 2022.

Bruce Woodruff · Answer

Just my opinion, but based on a few decades of observation.... :-)

I would bet that rates will start to ease come spring of '24. Remember..... there is a big election coming up and although the Fed is supposed to be independent, excuse me while I laugh hysterically. It is no surprise that the Prez appoints the Fed Chair.

I'll take a wild guess that by July 2024, we'll see 5.5% loans again.

Carlos Ptriawan · Answer

LOL what do you mean rate is unpredictable ? Some of you guys think the rate is a random act of weather ? LOL 10Y is at 3.75 right now after Powell's speech. Almost everyone who knows finance knows that Powell would dictate the rate and the discussion today is whether it's 50 or 25bps for the first cut in September.

The rate depends on the data, job growth and inflation, which is weaker in both prompts. Hence they already tell to reduce the rate possibly in September.

Eric DeNardo · Answer

I think rates will go down, Fed said they plan on cutting rates and they have been consistent the last couple years about what direction they are going. But you never know!

Scott Trench · Answer

I think the only logical thing to do is to plan on them going higher or staying flat, and allow yourself to be pleasantly surprised if they come down.

Heads you win, tails you win.

Carlos Ptriawan · Answer

Dot plot projecting 75 bps reduction.In other word, all previous forecasting using RRP that Fed is reducing rate is ............. working perfectly.Market is also predicting it perfecly.Everyone wins except Powell because he raised the inflation too fast and he wants to print money again too fast too lolthese guys aretruly doesn't understand what they are doing.

if they keep the rate at 3.75% from beginning we would see less foreclosure. True clown.

Austin Hayward · Answer

Well... as we can see... predictions on this thread didn't age well ; )

August 2, 2024 - Current 30yr Fixed - 7.532%Bought a house at 6.5% and mortgage broker swore rates were going to 5% by end of 2023... and here we are lol

AJ Wong · Answer

Historic drop in rates today, look for the trend to continue. FHA Streamlines pricing in the high 5%'s very low 6%'s. Possible refinance opportunities on the horizon earlier than anticipated.

Carlos Ptriawan · Answer

When it comes to the illegal immigration realm, we enter political discussion LOL (but I do agree with you).

One of their (strange neo-liberal) theory is that massive illegal immigration would reduce the inflation effect a lot and also they are not going to compete with the American.

Of course, that's their standing, which I could only laugh.

Carlos Ptriawan · Answer

Thing is this, they want multiple data to follow their trajectory, they think one indicator like inflation data is not sufficient to make cut decision, they are then waiting for the employment to collapse to start printing again as they want to make the pain in economy as long as possible.

How will interest rates trend in 2024?

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