If you’ve been asking, ‘are mortgage loan rates going down?’ you’re not alone. With housing markets shifting and economic uncertainty lingering, millions are watching rate trends closely. The answer isn’t simple—but we’ll break down everything you need to know.
Are Mortgage Loan Rates Going Down? The Big Picture
Understanding whether mortgage loan rates are going down requires a look at both current data and future projections. As of mid-2024, rates have shown signs of stabilization after a volatile period driven by inflation, Federal Reserve policy, and global economic pressures. While they haven’t dropped significantly from their 2022–2023 highs, there are growing signals that a downward trend may be on the horizon.
Current Mortgage Rate Trends (2024)
As of June 2024, the average 30-year fixed mortgage rate sits around 6.7%, according to Freddie Mac’s Primary Mortgage Market Survey. This is a slight decrease from the peak of 7.8% seen in late 2023 but still well above the historic lows of 2–3% during the pandemic years.
- 30-year fixed: ~6.7%
- 15-year fixed: ~6.1%
- 5/1 adjustable-rate mortgage (ARM): ~6.3%
This moderation reflects cooling inflation and cautious optimism among policymakers. However, ‘going down’ doesn’t mean ‘back to normal’—yet.
Historical Context: How High Have Rates Been?
To truly understand if mortgage loan rates are going down, it helps to look back. In 2020 and early 2021, rates plunged below 3%, fueled by pandemic-era stimulus and ultra-low federal funds rates. But as inflation surged past 9% in 2022, the Federal Reserve responded with aggressive rate hikes.
“The Fed raised interest rates 11 times between March 2022 and July 2023, pushing the federal funds rate from near zero to 5.25%–5.5%—the highest in over two decades.” — Federal Reserve
Since mortgage rates closely follow the yield on the 10-year Treasury note, which in turn reacts to Fed policy and inflation expectations, this led to a rapid climb in borrowing costs for homebuyers.
Are Mortgage Loan Rates Going Down in 2024? Key Drivers
The direction of mortgage rates hinges on several macroeconomic forces. Let’s explore the most influential factors determining whether mortgage loan rates are going down—or might soon.
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Inflation and the Federal Reserve
Inflation remains the single biggest factor influencing whether mortgage loan rates are going down. When inflation is high, the Fed raises interest rates to cool spending. When inflation cools, the Fed can pause—or even cut rates.
In 2024, inflation has slowed to around 3.2% (year-over-year CPI), down from 9.1% in 2022. This improvement has markets betting on potential rate cuts later this year.
- CPI (Consumer Price Index): 3.2% (May 2024)
- PCE Index (Fed’s preferred measure): 2.8%
- Fed Funds Rate: 5.25%–5.50% (unchanged since July 2023)
If inflation continues to trend toward the Fed’s 2% target, rate cuts could begin as early as September 2024. That would likely push mortgage rates lower.
10-Year Treasury Yield and Mortgage Rates
Mortgage rates don’t move in lockstep with the Fed’s benchmark rate. Instead, they’re more directly tied to the yield on the 10-year U.S. Treasury note. As of June 2024, that yield is around 4.3%, down from a high of 5% in late 2023.
When investors flock to safe assets like Treasuries during economic uncertainty, yields fall—and so do mortgage rates. Conversely, strong economic data can push yields up.
“The 10-year Treasury yield is a leading indicator for mortgage rates. A falling yield often precedes lower home loan costs.” — Investopedia
The recent dip in yields suggests that markets expect slower growth and possible rate cuts—both bullish signs for lower mortgage rates.
Housing Market Demand and Inventory
Supply and demand dynamics in the housing market also influence rates. With home prices still high and inventory tight, demand remains strong among buyers who can afford higher payments. This puts upward pressure on rates.
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However, affordability constraints are causing a slowdown in sales. According to the National Association of Realtors, existing home sales dropped 18% year-over-year in Q1 2024. This reduced demand may encourage lenders to lower rates to attract borrowers.
- Median existing-home price: $415,000 (Q1 2024)
- Months of inventory: 3.2 (up from 2.8 in 2023)
- Home sales: Down 18% YoY
More inventory and softer demand could create conditions where lenders compete on rate, helping drive mortgage costs down.
Are Mortgage Loan Rates Going Down? Expert Forecasts for 2024–2025
So, are mortgage loan rates going down in the near future? Most experts believe yes—but gradually. Let’s look at what top financial institutions and housing analysts are predicting.
Freddie Mac’s 2024 Outlook
Freddie Mac’s June 2024 forecast projects the 30-year fixed mortgage rate to average 6.5% for the year, with a potential drop to 6.1% by the end of 2025 if inflation remains under control and the Fed cuts rates.
- 2024 average: 6.5%
- 2025 forecast: 6.1%
- Q4 2024 projection: 6.3%
This suggests a slow but steady decline, not a sudden plunge.
Bankrate and Fannie Mae Predictions
Bankrate’s chief financial analyst, Greg McBride, notes that while rates have stabilized, “a meaningful drop won’t happen until the Fed starts cutting rates.” He expects the first cut in late 2024, followed by a gradual easing in 2025.
Fannie Mae’s Economic & Strategic Research (ESR) Group forecasts a similar path, with mortgage rates dipping below 6% by mid-2025 if economic growth slows and inflation stays tame.
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“We anticipate mortgage rates will trend lower over the next 12–18 months, supported by Fed rate cuts and moderating inflation.” — Fannie Mae ESR Group
Wall Street and Investment Bank Forecasts
Major investment banks like JPMorgan, Goldman Sachs, and Wells Fargo have also weighed in:
- JPMorgan: Predicts Fed cuts starting in September 2024; mortgage rates could fall to 5.8% by Q2 2025.
- Goldman Sachs: Expects two 25-basis-point cuts in 2024; 30-year rates to average 6.0% in 2025.
- Wells Fargo: More cautious, forecasting only one rate cut in 2024; mortgage rates to end 2024 at 6.4%.
While there’s variation in timing and magnitude, the consensus is clear: mortgage loan rates are going down—just not overnight.
Are Mortgage Loan Rates Going Down? Regional Differences
The national average tells one story, but local markets can vary widely. Whether mortgage loan rates are going down depends partly on where you live and the competitiveness of your local lending environment.
High-Cost vs. Low-Cost Housing Markets
In high-cost areas like California, New York, and Washington State, conforming loan limits are higher ($800,000+ in some counties), and jumbo loans are common. These often carry slightly higher rates than standard loans.
However, competition among lenders in these markets can lead to better deals. For example, in San Francisco, some credit unions are offering 30-year fixed rates at 6.2% to qualified borrowers—below the national average.
- California: Avg. 30-year rate: 6.5%
- Texas: Avg. 30-year rate: 6.8%
- Florida: Avg. 30-year rate: 6.7%
- Midwest (Illinois, Ohio): Avg. 6.6%
Differences stem from state regulations, property taxes, and local lender competition.
Urban vs. Rural Lending Trends
Rural areas often have fewer lenders, which can reduce competition and keep rates higher. However, USDA and rural development loan programs offer subsidized rates in eligible areas.
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For instance, USDA loans in rural zones may offer rates as low as 5.9% with no down payment, making them attractive even in a high-rate environment.
“In less competitive markets, borrowers should shop aggressively. A half-point difference can save tens of thousands over the life of the loan.” — Consumer Financial Protection Bureau
Are Mortgage Loan Rates Going Down? Impact on Homebuyers
The question ‘are mortgage loan rates going down?’ matters most to those planning to buy a home. Even small changes in rates have big financial implications.
Monthly Payment Differences by Rate
Let’s say you’re buying a $400,000 home with a 20% down payment ($80,000), financing $320,000. Here’s how monthly payments change with different rates:
- At 7.5%: $2,248/month (P&I)
- At 7.0%: $2,129/month
- At 6.5%: $2,014/month
- At 6.0%: $1,903/month
- At 5.5%: $1,797/month
A drop from 7.5% to 6.0% saves $345 per month—or $4,140 per year. Over 30 years, that’s over $124,000 in savings.
Refinancing Opportunities
If you locked in a high rate during 2022–2023, you might be wondering if now is the time to refinance. The general rule: aim for at least a 0.75% to 1% reduction to make refinancing worth it.
With current rates around 6.7%, borrowers with rates above 7.7% could benefit. However, closing costs (typically 2–5% of the loan) must be factored in.
- Break-even point: If closing costs are $6,000 and you save $200/month, it takes 30 months to break even.
- Consider staying in your home at least that long to profit.
For those with adjustable-rate mortgages (ARMs) facing reset, refinancing to a fixed rate could provide stability—even if the new rate isn’t dramatically lower.
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First-Time Buyer Challenges
First-time buyers face a tough market. High home prices combined with elevated mortgage rates have pushed affordability to a 40-year low, according to the National Association of Realtors.
Many are turning to alternative options:
- Down payment assistance programs
- Gift funds from family
- Owner-occupant investor properties (e.g., duplexes)
- Lease-to-own agreements
Some lenders are also offering “rate buydowns,” where sellers or builders temporarily cover part of the interest to make payments more affordable.
Are Mortgage Loan Rates Going Down? What the Data Says
Beyond forecasts and expert opinions, hard data reveals whether mortgage loan rates are going down. Let’s examine recent trends and statistical evidence.
Weekly Rate Movements (Q2 2024)
Freddie Mac’s weekly PMMS data shows a gradual decline:
- March 2024: 6.9%
- April 2024: 6.8%
- May 2024: 6.75%
- June 2024: 6.7%
This 20-basis-point drop over three months may seem small, but it signals a shift in momentum. If this pace continues, rates could fall below 6.5% by year-end.
Refinance and Purchase Application Index
The Mortgage Bankers Association (MBA) tracks mortgage applications. In May 2024, the refinance index rose 12% month-over-month, while the purchase index increased 7%.
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This uptick suggests borrowers are responding to even modest rate declines. When rates drop just 0.25%, it can trigger a wave of refinancing activity.
“A 10% increase in refinance applications often precedes further rate declines as lenders adjust to demand.” — MBA Weekly Report
Delinquency and Default Rates
Despite higher rates, mortgage delinquency remains low (around 3.5% as of Q1 2024), according to the New York Fed. This indicates borrowers are managing payments, possibly due to strong employment and home equity.
Low default risk gives lenders confidence to offer competitive rates, supporting further declines.
Are Mortgage Loan Rates Going Down? Strategies to Benefit
Whether you’re buying, refinancing, or just watching, there are smart ways to position yourself if mortgage loan rates are going down.
Lock In When Rates Dip
Rate lock agreements (typically 30–60 days) let you secure a rate while you close on a home. If rates are trending down, you might wait—but that’s risky.
- Monitor weekly trends via Freddie Mac or Bankrate.
- Set a target rate (e.g., 6.2%) and act when it hits.
- Use a float-down clause if your lender offers it (allows one rate reduction if rates drop before closing).
Improve Your Credit Score
Your credit score directly impacts the rate you qualify for. Borrowers with FICO scores above 760 typically get the best deals.
- Pay down credit card balances
- Correct errors on your credit report
- Avoid new credit applications before applying for a mortgage
Improving your score by even 50 points can save 0.5% or more on your rate.
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Shop Around with Multiple Lenders
Never accept the first rate quote. A 2024 LendingTree study found that borrowers who compared five or more lenders saved an average of 0.37% on their rate.
- Get quotes from banks, credit unions, online lenders, and mortgage brokers
- Compare APR (Annual Percentage Rate), not just the interest rate
- Negotiate lender credits or closing cost assistance
“The difference between the highest and lowest quote can exceed $100,000 over 30 years.” — LendingTree
Are Mortgage Loan Rates Going Down? Final Outlook
So, are mortgage loan rates going down? The evidence points to yes—but slowly. With inflation cooling, the Fed nearing a pivot, and Treasury yields moderating, the conditions are ripe for lower borrowing costs.
While we may not return to sub-3% rates anytime soon, a drop to 6% or below by late 2025 is increasingly likely. For homebuyers and refinancers, patience and preparation will be key.
Are mortgage loan rates going down in 2024?
Yes, mortgage loan rates are showing signs of a gradual decline in 2024. After peaking in late 2023, rates have stabilized and begun to trend downward due to cooling inflation and expectations of Federal Reserve rate cuts. While the drop has been modest so far, forecasts suggest further decreases through 2025.
Will mortgage rates drop below 6% in 2025?
Many experts, including Freddie Mac and Fannie Mae, predict that mortgage rates could fall below 6% by mid-2025 if inflation remains under control and the Federal Reserve begins cutting interest rates. However, economic surprises could delay or alter this trajectory.
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Should I wait for mortgage rates to go down?
Waiting carries risk. While rates may drop further, they could also rise again if inflation rebounds or the economy strengthens unexpectedly. If you’re ready to buy or refinance, consider locking in a rate when it aligns with your budget and financial goals.
How much can I save if mortgage rates go down?
Even a 0.5% drop can save hundreds per month. For a $300,000 loan, reducing the rate from 7% to 6.5% saves about $100/month or $36,000 over 30 years. Larger loans amplify these savings.
What causes mortgage rates to go down?
Mortgage rates fall when inflation decreases, the Federal Reserve cuts interest rates, the 10-year Treasury yield drops, or housing demand softens. Economic uncertainty can also drive investors to bonds, lowering yields and mortgage rates.
Ultimately, the trend is promising. While ‘are mortgage loan rates going down’ remains a hot topic, the data and expert consensus suggest we’re entering a phase of gradual relief for borrowers. Stay informed, act strategically, and use every tool at your disposal to secure the best possible rate.
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