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Insights From Economists: Detailed Predictions for Interest Rates in October 2024

Bright MLS chief economist Lisa Sturtevant. “Mortgage rates will fall further during the second half of the year, but it will not be a steady decline through year’s end. There will be some ups and downs.”

William Raveis Mortgage regional vice president Melissa Cohn. “The peak in mortgage rates is behind us, but mortgage rates are not going to decline as fast as everyone would like them to”

First American deputy chief economist Odeta Kushi. “Mortgage rates are notoriously difficult to forecast because they’re tied to the wider economy and global geopolitical events. However, there are indications that mortgage rates could gradually decline through the remainder of the year.”

Zillow Home Loans chief economist Orphe Divounguy. “At this point, I don’t expect to see significant declines in mortgage rates through the end of the year. However, we are likely to see some more volatility. While inflation is expected to keep moderating, any unexpected changes in labor market conditions could trigger more mortgage rate volatility as investors reassess their forecasts for economic growth and the path of Fed policy.”

How Today's Interest Rates Affect Your Monthly Payments

If you know how much you’re borrowing, what type of loan you’re getting and how many years you have to pay it back, you can use a mortgage calculator to check your monthly payment at different interest rates.

For instance, if you have a starting loan balance of $425,000 on a 30-year fixed-rate mortgage, here’s approximately what you can expect to pay in principal and interest every month, excluding taxes, mortgage insurance, homeowners insurance and HOA fees:

At a 5% interest rate. $2,281 in monthly payments (excluding taxes, mortgage insurance, homeowners insurance and HOA fees)

At a 6% interest rate. $2,548 in monthly payments (excluding taxes, mortgage insurance, homeowners insurance and HOA fees)

At a 7% interest rate. $2,828 in monthly payments (excluding taxes, mortgage insurance, homeowners insurance and HOA fees)

At an 8% interest rate. $3,119 in monthly payments (excluding taxes, mortgage insurance, homeowners insurance and HOA fees)

How To Get the Best Mortgage Rate Today

Though lenders decide your mortgage rate, there are some proactive steps you can take to ensure the best rate possible. For example, advanced preparation and meeting with multiple lenders can go a long way. Even lowering your rate by a few basis points can save you money in the long run.

Here are some other ways you can improve your chances of getting the best deal:

Take stock of your financial situation. Before you fall in love with your dream home, you better make sure you can afford the monthly payments and other homeownership costs. For instance, start by looking at your debt-to-income (DTI) ratio—aka your total monthly debts against your monthly earnings—to determine how much home you can afford.

Review your credit score. Lenders look at your credit score to evaluate the risk you pose as a borrower. A higher score gives you a better chance at scoring favorable mortgage terms. Paying down balances, limiting new credit cards and loans and checking your credit report for errors can all work towards raising your score.

Meet with several lenders. You don’t have to go with the first lender quote you receive. You can shop around to find the best loan to fit your needs—research various mortgage lenders and different loans you might qualify for to put yourself in a stronger position once you are ready to buy a home.

Crunch the numbers with a mortgage calculator. Once you know which type of loan you qualify for, you can estimate your monthly payments by punching your numbers into various mortgage calculators, such as a 30-year fixed mortgage calculator or mortgage amortization calculator.

Save money. The more you put down on a home, the less you’ll need to borrow from a lender. This means lower monthly payments and more savings over the life of the loan.

What Affects Current Mortgage Rates?

Federal Reserve monetary policy. Mortgage rates are indirectly influenced by the Federal Reserve’s monetary policy. When the central bank raises the federal funds target rate, as it did throughout 2022 and 2023, that has a knock-on effect by causing short-term interest rates to go up. In turn, interest rates for home loans tend to increase as lenders pass on the higher borrowing costs to consumers.

Lenders. A lender with physical locations and a lot of overhead may charge higher interest rates to cover its operating costs and make a profit on its mortgage business. On the other hand, lenders that operate solely online tend to offer lower mortgage rates because they have less fixed costs to cover.

Your credit. Your individual credit profile also affects the mortgage rate you qualify for. Borrowers with a strong credit history and good score (at least 680) usually receive a lower interest rate, while borrowers with a poor credit score—whom lenders consider high risk—are typically charged a higher interest rate.

How To Compare Current Mortgage Rates

Comparison shopping often leads to finding the lowest rates. To get started, you can compare rates and different lender offerings online. Pay attention to the fine print on the websites to see how those rates are determined. For the most accurate quote, you’ll need to apply for a mortgage through various lenders or go through a mortgage broker.

When applying for a mortgage, you must show that you're financially stable, so avoid quitting or changing your job—unless it's for a higher salary—right before or during your application process. Otherwise, lenders may regard your situation as too unstable to afford the monthly payments and deny you a loan. Talk to your lender before making any changes.

Applying for a mortgage on your own is straightforward and most lenders offer online applications, so you don’t have to drive to a physical location. Additionally, applying for multiple mortgages in a short period of time won’t affect your credit score as each application is counted as one query within a 45-day window.

Finally, when you’re comparing rate quotes, be sure to look at the APR, not just the interest rate. The APR reflects the total cost of your loan on an annual basis and any discount points being charged.

Predictions indicate that home prices will remain elevated throughout 2024 while new construction continues to lag behind. This will put buyers in tight housing situations for the foreseeable future.

To cut costs, that could mean some buyers would need to move further away from higher-priced cities into more affordable metros. For others, it could mean downsizing, or foregoing amenities or important contingencies like a home inspection. However, be careful about giving up contingencies because it could cost more in the long run if the house has major problems not fixed by the seller upon inspection.

Another important consideration in this market is determining how long you plan to stay in the home. People buying their “forever home” have less to fear if the market reverses as they can ride the wave of ups and downs. But buyers who plan on moving in a few years are in a riskier position if the market plummets. That’s why it’s so important to shop at the outset for a realtor and lender who are experienced housing experts in your market of interest and who you trust to give sound advice.