As fall approaches, potential homebuyers and homeowners alike are keeping a close eye on mortgage rates. After a period of high interest rates driven by persistent inflation and the Federal Reserve’s aggressive rate hikes, there are signs that relief may be on the horizon. But how low will mortgage rates go this fall, and what does that mean for those looking to buy or refinance a home?

Mortgage Rates Are Expected to Gradually Decline

As we move into fall 2024, many experts agree that mortgage rates are likely to continue their gradual decline. This anticipated drop is largely tied to expectations that the Federal Reserve may begin cutting rates as early as September.

Robert Cook, Vice President of Discover Home Loans, notes that if economic data continues to show signs of cooling inflation and a slowing economy, the Fed will likely initiate a series of rate cuts. However, Cook cautions that the market has already factored in these expectations, which is why mortgage rates have already seen a slight decline in recent months.

Jeff Tucker, principal economist at Windermere Real Estate, echoes this sentiment, suggesting that while rates may continue to decline, the drop will be modest and uneven. He points out that inflation is cooling, and the labor market is softening, both of which contribute to lower rates.

Melissa Cohn, regional vice president at William Raveis Mortgage, also expects mortgage rates to trend downward this fall. She attributes this to the ongoing cooling of inflation, bringing it closer to the Fed’s target of 2%.

How Far Could Mortgage Rates Fall?

For those considering buying a home this fall, the big question is: How low could mortgage rates go? Jeff Tucker estimates that rates could settle between 6% and 6.5%, with 6.25% being a reasonable expectation. However, he believes that seeing rates dip below 6% is unlikely at this point.

This slight decline may offer some relief to homebuyers, but it’s important to keep expectations in check. While a lower mortgage rate can make homeownership more affordable, the drop is not expected to be dramatic.

Is Now the Right Time to Buy a Home?

Deciding whether to buy a home now or wait for potentially lower rates is a personal decision that depends on your financial situation. Robert Cook advises that the decision should be based on individual circumstances rather than trying to time the market.

There are advantages to locking in a mortgage rate now if you’re financially ready to buy. A fixed-rate mortgage can protect you from future rate increases, and Melissa Cohn believes that doing so now might help you avoid increased competition as more buyers enter the market when rates fall.

Cohn also suggests that buying a home now at a lower price and refinancing later when rates bottom out could be a smart strategy.

The Bottom Line: Focus on What You Can Control

While experts agree that mortgage rates are likely to decline this fall, the exact extent of the drop remains uncertain. Instead of waiting for the perfect rate, it’s important to focus on your budget and prepare for homeownership based on your current financial situation.

Jeff Tucker advises working with a knowledgeable local real estate agent to navigate the specifics of your local market. If you do purchase a home now and rates drop further, remember that refinancing is always an option.

In this dynamic and unpredictable market, staying informed and prepared is key to making the best decision for your financial future.

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