Is it possible to get a 4% mortgage rate?
Aspiring homeowners put off by current mortgage rates can still find newly built homes that come with a 4% mortgage rate, one real-estate expert says. With the 30-year mortgage averaging 7.76% as of Nov. 2, many home buyers find that borrowing costs — and high home prices — make it too expensive to purchase a home.
Currently, a 4% mortgage rate would be considered low. If that question was asked at the beginning of 2022—when 30-year mortgage rates for conforming loans was 3.77%–instead of the end of 2022—when the same mortgage rates were 7.06%—the answer would have been, yes, a 4% mortgage rate is high.
The average 30-year fixed rate reached an all-time record low of 2.65% in January 2021 before surging to 7.79% in October 2023, according to Freddie Mac.
If you apply for a loan and have a good credit score, you're more likely to be offered a low interest rate. However, if you already have a loan, it's not too late to improve your credit score and qualify for better rates with a mortgage refinance.
Mortgage rates are expected to decline later this year as the U.S. economy weakens, inflation slows and the Federal Reserve cuts interest rates. The 30-year fixed mortgage rate is expected to fall to the mid- to low-6% range through the end of 2024, potentially dipping into high-5% territory by early 2025.
It's possible that rates will one day go back down to 3%, though if current trends hold that's not likely to happen anytime soon.
In summary, it is unlikely that mortgage rates in the US will ever reach 3% again, at least not in the foreseeable future. This is due to a combination of factors, including: Higher Inflation: Inflation is currently at a 40-year high in the US, and the Federal Reserve is raising interest rates to combat it.
Interest rates reached their highest point in modern history in October 1981 when they peaked at 18.63%, according to the Freddie Mac data. Fixed mortgage rates declined from there, but they finished the decade at around 10%.
2021: The lowest 30-year mortgage rates ever
And it kept falling to a new record low of just 2.65% in January 2021. The average mortgage rate for that year was 2.96%. That year marked an incredibly appealing homeownership opportunity for first-time homebuyers to enter the housing market.
What to expect from mortgage rates in 2024. Mortgage forecasters base their projections on different data, but most housing market experts predict rates will move toward 6% by the end of 2024.
Is 6% a low mortgage rate?
In short, yes, but it's all relative. “In today's market, 6% is a great rate compared to the historic average of a little over 7%,” Rueth said. “However, 6% no longer looks good because homeowners were spoiled by 2.75% mortgage rates a few years ago.”
In today's market, a good mortgage interest rate can fall in the high-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circ*mstances. To understand what a favorable mortgage rate looks like for you, get quotes from a few different lenders and compare them.
| Loan Type | Purchase | Refinance |
|---|---|---|
| 30-Year Fixed | 7.65% | 8.05% |
| FHA 30-Year Fixed | 7.48% | 7.77% |
| VA 30-Year Fixed | 7.22% | 7.69% |
| Jumbo 30-Year Fixed | 7.20% | 7.20% |
Yes. This is the best time to buy a house in California. With the current trend in the CA housing market, you'll find better deals on your dream home during Q2 2024. As per Fannie Mae, mortgage rates may drop more in Q2 of 2024 due to economic changes, inflation, and central bank policy adjustments.
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."
That means the mortgage rates will likely be in the 6% to 7% range for most of the year.” Mortgage Bankers Association (MBA). MBA's baseline forecast is for the 30-year fixed-rate mortgage to end 2024 at 6.1% and reach 5.5% at the end of 2025 as Treasury rates decline and the spread narrows.
The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.
Yes, you should buy a house now if you're financially ready to do so. Here are the biggest reasons why that's the best move: If interest rates continue to drop, then house prices will start going up. Lots of folks haven't been able to afford a house because of high interest rates, so they've been sitting and waiting.
Once you find a rate that is an ideal fit for your budget, lock in the rate as soon as possible. There is no way to predict with certainty whether a rate will go up or down in the weeks or even months it sometimes takes to close your loan.
When inflation is running high, the Fed raises those short-term rates to slow the economy and reduce pressure on prices. But higher interest rates make it more expensive for banks to borrow, so they raise their rates on consumer loans, including mortgages, to compensate.
When was the last time interest rates were at 3%?
Average 30-year fixed rate mortgage in the U.S.
That's because average 30-year fixed mortgage rates of 3% or less were an anomaly related to the pandemic, lasting from about July 2020 to Nov. 2022. Historically, the rates have been closer to an average of 7% over the past 50 years, according to Freddie Mac data.
Projected Interest Rates in the Next Five Years
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%.
By 1990, that median had risen to $123,900. Spurred by the Great Inflation, the 30-year fixed mortgage rate reached a pinnacle of 18.4 percent in October 1981, according to Freddie Mac.
The 1970s and 1980s
As we headed into the 80s, it's important to note that the country was in the middle of a recession, largely caused by the oil crises of 1973 and 1979. The second oil shock caused skyrocketing inflation. The cost of goods and services rose, so fittingly, mortgage rates did too.
In the fall of 1981, the average 30-year mortgage rate reached an all-time high of 18.63%. We'll examine mortgage trends for the past five decades and look ahead to see what borrowers can expect in 2024.
