Last updated on March 29th, 2024 at 08:52 pm
Imagine the feeling of turning the key in the lock of your new home for the very first time. This dream scenario is increasingly becoming a reality for more and more Americans. Homeownership has been on the rise since the pandemic, with nearly 66% of the US population owning instead of renting. The biggest thing that keeps many people from dipping their toes into the housing market is high interest rates. Are you curious if the mortgage interest rates in 2024 will make for prime home-buying opportunities? Read on to find out!
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Mortgage Interest Rates in 2024: The Trends
The good news is that mortgage interest rates are on the decline in 2024. That does not mean, however, that they are significantly more affordable. Interest rates spiked in October 2023 to 7.79%. Since then, they have declined a total of 1.19%. This is a welcome relief, and experts are hopeful that interest rates will continue to decline throughout the rest of the year. A lot depends on whether inflation continues or cools. If the Federal Reserve makes rate cuts this year, inflation cools, and the overall economy remains stable, then interest rates are likely to remain low. If there’s a risk of recession, then rates may not fall as much as we’d like, or they could go up.
How Will This Impact Your Payment?
Interest rates impact your payment in two different ways. It shows up in your total monthly payment and the amount you pay for your home overall if you pay off your home without refinancing. Even interest rates that are one or two points higher can mean hundreds of extra dollars in your mortgage payment. This means that your selection of affordable housing is greatly reduced when interest rates are through the roof. Declining interest rates, on the other hand, greatly increase your purchasing power.
For this reason, many people hold off on purchasing their homes until interest rates are low.
How to Minimize Your Interest Rate in Today’s Housing Market
The state of the housing market isn’t the only factor impacting your ability to buy. There are several personal factors that you can control to ensure that the interest rate you’re offered is as low as possible. The first thing you should do is check your credit. The lower your credit score, the higher your interest rate. In many cases, it’s worth taking the time to improve your credit before locking yourself into a high-interest mortgage.
Second, shop around! What are different lenders offering you? Don’t settle for one offer, there could be better out there. Finally, make sure to do your homework on the small things that go into your interest rate. Have APR vs. APY explained if your knowledge is fuzzy. The more you know, the more power you have in the process.
Are You Ready to Buy?
After many years of high rates, the mortgage interest rates in 2024 are finally on the decline. That doesn’t mean that the market is going to return to the low interest rates seen pre-pandemic. Make sure to do everything you can to optimize your mortgage application so you can get a lower rate and buy your dream house!
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