What could interest rates look like in 2024?
Mortgage Bankers Association (MBA).
30-year mortgage rates are currently expected to fall to somewhere between 6.1% and 6.4% in 2024. Instead of waiting for rates to drop, homebuyers should consider buying now and refinancing later to avoid increased competition next year.
ING's interest rate predictions indicate 2024 rates starting at 4%, with subsequent cuts to 3.75% in the second quarter. Then, 3.5% in the third, and 3.25% in the final quarter of 2024. In 2025, ING predicts a further decline to 3%.
The median estimate for the fed-funds rate target range at the end of 2025 moved to 3.75% to 4%, from 3.5% to 3.75% in December.
CD account interest rates will drop
"CD rates will most likely drop and drop substantially in 2024," says Robert Johnson, professor of finance at Heider College of Business at Creighton University. "The biggest reason is the likelihood of Federal Reserve rate cuts later this year."
Mortgage rates may continue to rise in 2024. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022 and 2023. However, if the U.S. does indeed enter a recession, mortgage rates could come down.
Until inflation slows and the Fed is able to start lowering the federal funds rate, mortgage rates are expected to remain elevated. Most major forecasts believe that mortgage rates will ultimately trend down this year. Fannie Mae researchers recently predicted that rates would reach 6.4% by the end of 2024.
Futures indicate that short-term interest rates will bottom out at about 3.75% in 2027, while the median forecast among members of the policy-making Federal Open Market Committee is 2.6% — more than 100 basis points lower.
The nation's top economists say the Fed is most likely to keep interest rates higher than 2.5 percent — often considered the “goldilocks,” not-too-tight, not-too-loose level for its benchmark federal funds rate — until the end of 2026, Bankrate's quarterly economists' poll found.
No, CD rates have started incrementally dropping in 2024. Both national average and high-yield CD rates saw a slowdown in increases last year.
What is the prime rate in 2024?
| Instruments | 2024 Apr 19 | 2024 Apr 22 |
|---|---|---|
| Bank prime loan 2 3 7 | 8.50 | 8.50 |
| Discount window primary credit 2 8 | 5.50 | 5.50 |
| U.S. government securities | ||
| Treasury bills (secondary market) 3 4 |
| Name | 2026 | Preceding Period |
|---|---|---|
| Federal funds rate | 3.1 | 3.9 |
| CENTRAL TENDENCY LOW | ||
| Change in real GDP | 1.8 | 1.9 |
| Unemployment rate | 3.9 | 3.9 |
Interest rate futures currently imply a terminal rate of 3.7% by the end of 2026, a good bit higher than the Fed's projected 3.1% over the same time horizon, never mind the long-run neutral view of 2.6%.
| Institution | Rate (APY) | Minimum Deposit |
|---|---|---|
| Quorum Federal Credit Union | 5.35% | $100,000 |
| Credit One Bank | 5.35% | $100,000 |
| Third Federal Savings & Loan | 5.25% | $100,000 |
| CD Bank | 5.25% | $100,000 |
You can find 6% CD rates at a few financial institutions, but chances are those rates are only available on CDs with maturities of 12 months or less. Financial institutions offer high rates to compete for business, but they don't want to pay customers ultra-high rates over many years.
The decision to open a CD now or wait depends on many factors, including interest rates, when you'll need to access the funds and the state of your emergency fund. In general, when rates are high — as they are now — opening a CD allows you to maximize your earnings even if rates go down in the future.
After all, higher rates equate to higher minimum payments. So, you may be wondering if, and when, mortgage rates might fall to 3% or lower again - and whether or not it's worth waiting to buy a home until they do. Although rates could fall to 3% again one day, it's not likely to happen any time soon.
Big four banks' cash rate forecasts
The big four bank economic teams have all cast their predictions for the next series of cash rate movements: CBA: Peak of 4.35% in November 2023, then dropping to 2.85% by June 2025. Westpac: Peak of 4.35% in November 2023, then dropping to 3.10% by December 2025.
| Loan Type | Purchase | Refinance |
|---|---|---|
| FHA 30-Year Fixed | 7.24% | 7.55% |
| VA 30-Year Fixed | 7.08% | 7.58% |
| Jumbo 30-Year Fixed | 7.20% | 7.20% |
| 20-Year Fixed | 7.37% | 7.62% |
Are mortgage rates negotiable? Yes, to some degree, mortgage interest rates are negotiable. Mortgage lenders have some flexibility when it comes to the rates they offer. However, in many cases getting a lower rate on your loan will come with a price, such as paying “points” to get a lower rate.
What is the 30-year fixed-rate mortgage?
A 30-year fixed-rate mortgage is the most common mortgage loan option. It has a repayment period of 30 years and the interest rate doesn't change throughout the life of the loan.
An ARM may make good financial sense if you only plan to live in your house for that amount of time or plan to pay off your mortgage early, before interest rates can rise.
Here's where three experts predict mortgage rates are heading: Around 6% or below by Q1 2025: "Rates hit 8% towards the end of last year, and right now we are seeing rates closer to 6.875%," says Haymore. "By the first quarter of 2025, mortgage rates could potentially fall below the 6% threshold, or maybe even lower."
- Multiyear guaranteed annuities. MYGAs, as these fixed-rate annuities are known, can be a good option for savers who are looking for returns comparable to those on certificates of deposit but for longer periods. ...
- Defined-maturity ETFs. ...
- Preferred stocks. ...
- Exchange-traded debt.
Also keep in mind that snagging the highest APY isn't the only way to win with today's CDs. Since CD rates could fall much further in 2024 and 2025, locking in a rate soon that's guaranteed for a year or more down the road could be a smart move.
