Reading Time:  5  minutes

In the unpredictable realm of mortgage interest rates, one thing remains certain: no one can predict their future trajectory with absolute certainty. It’s essential to approach discussions about interest rates with a healthy dose of skepticism and humility. Anyone who claims to possess a crystal-clear vision of what rates will do in the coming months is, frankly, someone you should approach with caution. That said, people often ask me what I think rates will do. Rather than claim to know exactly what will happen I will draw insights from historical trends, recent data, and my expert opinion to offer some guidance as we navigate the realm of mortgage rates in 2024.

First and foremost, it’s crucial to acknowledge that making a decision as significant as buying a home should not hinge solely on speculation about interest rates. While interest rates play a pivotal role in affordability, they are just one piece of the puzzle. Your financial stability, income, assets, and personal circumstances should take precedence in your decision-making process. Homeownership is a milestone that should be achieved on your terms, not dictated by market fluctuations. Let me say that again: The wisest approach to home buying is making the purchase on YOUR time. Not a salesman’s time, not when trying to time a market, and not the Fed’s time.

What has the Fed said?

Recent indications from the Federal Reserve suggest the possibility of rate cuts in 2024. However, interpreting statements from the Fed requires a nuanced understanding. While Fed Chair Jerome Powell’s remarks can provide insights, they are often carefully crafted and subject to interpretation. It’s wise not to place undue reliance on singular statements but rather to consider them within the broader context of economic indicators and trends.

What does the data say?

Examining historical data, particularly the movement of the 2-year Treasury yield, offers additional insights. This yield serves as a forward-looking indicator, reflecting market expectations of future Fed interest rate policies. Observing its fluctuations can provide clues about potential shifts in mortgage rates. Recent trends suggest a possible downward trajectory, indicating the likelihood of mortgage rates declining in 2024.

As an example, 2022 the 2-year Treasury yield was increasing. Shortly after that the Fed increased rates. Over the past several months the 2-year Treasury yield has been decreasing. Some say this means the Fed will start decreasing rates.

What do others say?

Supporting this outlook, esteemed economic research entities such as Fannie Mae, the Mortgage Bankers Association, Bankrate, Fortune, National Association of Home Builders, the National Association of Realtors, Zillow, and many more anticipate mortgage rates to decrease in the coming year. Their forecasts, coupled with market sentiments, point towards a scenario where rates could dip.

What should you say?

But what implications does this hold for the housing market as a whole? A decline in interest rates typically spurs increased buyer activity, potentially leading to heightened competition and bidding wars in already constrained markets. In regions like Arizona, where housing inventory remains low, this influx of buyers could tip the scales in favor of sellers, creating a seller’s market characterized by limited options for buyers.

Amidst these speculations and forecasts, it’s paramount to maintain perspective. Your journey towards homeownership should not be swayed by external factors beyond your control. Focus on your financial health, prioritize your family’s needs, and align your decision with your unique circumstances. Resist the temptation to time the market and instead concentrate on optimizing your finances and your family needs.

At Stewardship, we understand the complexities of home buying and the importance of personalized guidance. This is why we created the FREE Home Buying Game Plan tailored to your financial situation, providing valuable insights and advice to empower you in your decision-making process. Now you do not need to wonder if your finances are right, or guess on what you could do to put yourself in a better situation. Give us a call at 602-384-2604 or schedule a Free Home Buying Game Plan appointment to embark on your homeownership journey on your terms, guided by wisdom and love, not market conjecture.