Why are mortgage rates so high?

In 2023, mortgage rates went on a bit of a rollercoaster, hitting all-time highs. Towards the end of the year, they started to cool off a bit due to inflation pressures. But rates are still pretty high, making it a tough call for folks thinking about diving into the mortgage game, especially with the shaky economy and uncertain job scene.

Now, the Federal Open Market Committee (FOMC) recently decided to keep things steady with the benchmark federal funds rate (that’s the borrowing rate for banks and credit unions, and it also affects mortgage rates). This decision, made on November 1, was all about taming inflation. There’s a chance we might see a rate hike, but the odds are on the low side. Some are crossing their fingers for rates to take a nosedive and give a boost to the housing scene.

Now, let’s talk about what the experts are thinking for 30-year mortgage rates in 2024. They’ve got a hunch that rates will drop, but there’s a bit of a debate on when it’ll happen.

Come spring 2024, some realtors and respected analysts are betting on rates falling to 6%. The Mortgage Bankers Association is even more hopeful, predicting rates to hit 6.1% by the end of 2024 (somewhere between 6.5% to 5.1%). Bank of America, though, thinks the drop will be a slow burn, so don’t hold your breath for a big dip in the early months.