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When the Federal Reserve raised its benchmark interest rate to its highest point in decades in the summer of 2023, mortgage interest rates surged alongside it, hitting their highest level since 2000. But as inflation cooled in the final months of the year, hope was high that interest rate cuts could come as soon as the spring and summer of 2024 and that, accordingly, mortgage interest rates would start falling in tandem. While the Fed is only one factor in the mortgage interest rate equation (the 10-year Treasury yield also plays a critical role), it’s a significant one that can and has affected what rates mortgage lenders offer buyers.
That said, the expected downward trajectory of mortgage interest rates in 2024 has been a bumpy one, leading many homebuyers and owners looking to refinance to question whether they should act now or wait for additional drops that may not quickly materialize. In times like these, it helps to understand where mortgage rates have first been. Below, we’ll show how far mortgage interest rates have fallen in 2024 and explain why it may still be worth applying for a mortgage loan now.
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How far have mortgage interest rates fallen in 2024?
In short: Mortgage interest rates haven’t fallen much from where they started in January 2024, with a single exception in September following the Fed’s larger-than-expected 50 basis point cut to the federal funds rate. The average 30-year fixed mortgage interest rate was 6.96% on January 3, according to historical Bankrate data. That dropped to 6.84% by the end of the month but ticked up to 7.13% in February.
By April it was slightly over 7.30% but rates then dropped closer to 7% in May and June. By July, in anticipation of a Fed rate cut in September, the average 30-year mortgage interest rate broke under 7% to 6.86% on July 31. On August 7, the rate hit 6.59% and 6.47% on September 4. Mortgage rates plunged to a 2-year low on September 18 ahead of the official Fed rate cut, hitting 6.15%. But it didn’t stay there for long, as unemployment figures and new inflation data skewed the rate trajectory all over again.
Since that point, mortgage rates have been on a straight upward trend, hitting 6.26% on October 2, 6.52% on October 9, 6.78% on October 23 and 7% on November 6, bringing it slightly higher than where it started the year. As of November 20, the rate was 6.91%, just five basis points lower than January’s rate.
The potential for rates to increase again in 2025 is arguably as strong as the potential for rates to fall, with factors like inflation, unemployment, the 10-year Treasury yield and more all working together in a complex way. This is why it’s so important to check mortgage interest rates daily for an opportunity to capitalize on a lower rate when it’s available, because they may not be low for long.
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The bottom line
The dramatic plunge in mortgage interest rates that many were hoping for hasn’t materialized in 2024, at least not in the first 47 weeks of the year. That said, if leading economic indicators change in the final weeks of the year, it’s possible that the Federal Reserve can continue its interest-rate-cutting campaign. The CME Group’s FedWatch tool has a 25 basis point cut pegged at a 55% likelihood in December. And if that happens mortgage interest rates could adjust again. So make sure to monitor the rate climate for opportunities to take advantage – and be sure to boost your credit score now so that you’re in the best position to lock in a below-average rate when it’s available again.
