Brian Decker’s Mortgage Predictions for 2024

With the year ending in a tough period for potential home buyers, many housing forecasts are predicting a shift for 2024. While prospective home buyers shouldn't expect an immediate change to start the year, higher rates and costs should trend downward making purchasing a new home less discouraging and more of an affordable reality.

Below are some highlights of what is forecasted to change:

Lower Interest Rates

While nothing is official, there is speculation that the Fed is considering lowering interest rates. The consensus is that mortgage rates will be lower than last year, with some experts predicting rates will go down to high 5%s toward the end of the year. A drop in interest rates will make monthly mortgage costs more affordable, encouraging prospective buyers to enter what has been described as a dormant market. 

Improved Housing Market

New constructions are on the rise, creating more available housing throughout the country. Markets that have low new construction inventory are primed to see home prices increase in 2024. More housing benefits the market as it increases inventory options for homeowners and will get many homebuyers off the fence when rates drop back into the low 6% range. A higher volume of available rental properties gives renters more options, making some potential buyers stay put and creating less competition for prospective buyers. Combined with the anticipation of lower interest rates, would-be sellers will have the initiative to put their homes up for sale with an improved market, contributing further to the housing market.

Purchase Programs

Despite the expectation for lower interest rates and an improved housing market, affordability will still be a challenge for many prospective buyers. To counter this, many states have introduced assistance programs and grants for new home buyers. These programs are area specific so potential buyers should check with their loan provider to learn more about available programs and qualification requirements. A new program called the FHA EcoSmart loan allows homeowners to roll in solar, batteries and energy-efficient upgrades to eliminate their electric bill in high-cost utility areas in States like California, Nevada, Florida and several others. 

Deciding on the Right Time to Buy

While the market may still leave prospective buyers feeling pessimistic, there are positive signs for 2024. Interest rates are expected to decrease slowly throughout the year, improving the housing market by making monthly mortgage costs more affordable. Deciding on the right time to buy will be based on your financial situation, but with more purchase programs and grants expected to become available, we urge buyers to speak to a lender to explore the best options.

At Modern Lending, we’re a leading mortgage provider that puts families first by helping them find purchase options that align with their financial goals. Are you looking to purchase a new home? Our lending team is here to help! Submit the questionnaire below to get started.