With the U.S. Federal Reserve navigating interest rate policies and the upcoming 2024 election creating uncertainty, potential homebuyers and current homeowners alike are keeping a close eye on the market. While mortgage rates have fallen considerably over the past year, many are wondering how much more they might drop and whether now is the right time to refinance or buy.
Jennifer Beeston, Senior Vice President of Mortgage Lending at Rate, explained that while mortgage rates have decreased, future Fed rate cuts may already be priced into the market. In an interview, she emphasized that if the anticipated 25 basis point cut happens, “I don’t expect rates to change from where they are right now.” However, if the cut is larger, say 50 basis points, further reductions in mortgage rates could follow.
Beeston highlighted that while rates have come down significantly since last year, many Americans might not be fully aware of just how much they’ve already dropped. “In October 2023, we were at about 7.8% on a 30-year fixed mortgage. Now we’re at 6.25%,” she said, underscoring the savings this brings. For the average American home valued at $500,000, this reduction in rates equates to about $520 in monthly savings—a considerable difference for households.
While refinancing can be tempting, the timing isn’t always straightforward. Some borrowers might be waiting for further rate cuts through the end of the year, but with the 2024 presidential election looming, there is added uncertainty. According to Beeston, some are gambling, hoping rates will drop further, while others are choosing to refinance now to avoid leaving money on the table. She advises homeowners to consult with a loan officer to assess their personal financial situation before making a decision. With government loans like VA and FHA seeing significant drops, refinancing now could still result in substantial savings for many borrowers.
The 2024 election adds a unique wrinkle to the housing market. “There are people waiting until the presidential election to go shopping,” Beeston noted, adding that varying housing policies between candidates could further influence decision-making. With uncertainty around who will take office and how their policies will affect the housing market, volatility is expected as the election approaches. Some buyers may delay major financial decisions, while others could take advantage of the current climate before more fluctuations occur.
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When asked if there’s a specific mortgage rate number that might trigger increased activity in the market, Beeston suggested that “when you see that 30-year at about 5.5%, you’re going to see people get really excited.” However, she cautioned against waiting for a specific rate, advising potential buyers to focus on their personal comfort level with monthly payments and their individual financial situations. “Don’t wait for the election, don’t wait for a magic number,” she urged.
While the mortgage market may not see significant immediate changes with the next Fed rate cut, it remains an opportune moment for buyers and homeowners to assess their options. The advice? Work with a mortgage professional to determine what works best for your unique situation, regardless of what may come next with interest rates or election outcomes.
