As the end of 2024 approaches, mortgage rates remain a hot topic for both new homebuyers and those thinking about refinancing. Rates peaked in October 2023 and again earlier this year, but now we’re seeing a bit of a break, providing some breathing room for those weighing their options. Curious about where things are heading? Here’s a look at what’s driving these shifts—and what to expect as we move into 2025.
The 30-year fixed mortgage rate now averages around 6.78%, with 15-year rates at roughly 5.99%. These rates are still high compared to a few years ago, and the housing market is feeling the slowdown. 2024 could be one of the most challenging years for home sales in decades, with potential buyers and sellers sitting tight. So, what’s fueling these trends, and when might we see rates come down?
What’s Driving Today’s Rates?
The Federal Reserve’s policies have been a major influence. To tackle inflation, the Fed held steady on interest rates, keeping the federal funds rate between 5.25% and 5.5% from late July 2023 to mid September 2024. Since then they have dropped the rate twice by a half percent in September 2024 and a quarter percent just a couple weeks ago. The federal funds rate is now in the 4.5% to 4.75% range, but since these drops, the 30 and 15 year mortgage rates have increased by about the same amount as the federal funds rate cuts. As the economy cools, many hope the Fed may start easing rates further in 2025, which could bring mortgage rates back down gradually, possibly into the 5% range.
The Bigger Economic Picture
Mortgage rates don’t just depend on the Federal Reserve, broader economic signals, like inflation and employment data influence them as well. Inflation has been a big driver over the past year, and it’s finally starting to show signs of cooling. A steady labor market also helps, as employment numbers and wages impact buying power and housing demand.
These factors play into a delicate balance that the Fed and financial experts watch closely. If the labor market and inflation keep stabilizing, the chance of lower rates in 2025 looks stronger, potentially making buying more feasible for those waiting on the sidelines.
How the Market is Reacting
High rates have dampened the housing market, as potential buyers hold off and sellers face less demand, and as homeowners stay put due to their low interest rate mortgages. In Salt Lake County, the number of homes sold over the last two years compared to the previous two years, is down by 36%
That said, if rates start to decline, we could see a resurgence of activity. For buyers who are ready, this could be a good opportunity to explore their options, especially if they’re hoping for more inventory and competitive pricing as more sellers return to the market.
With housing inventory still relatively tight, a slight rate drop could create a domino effect, drawing in more listings and boosting competition. If you’re considering a move, keeping an eye on these trends can help you time your search for the best balance between rates and availability.
Looking Ahead: 2025 and Beyond
The general consensus among financial experts is cautious optimism. With inflation cooling and the Fed possibly adjusting policies, mortgage rates could start to dip in 2025. Predictions suggest that we might see rates in the high 5% range by next year—a promising shift for homebuyers and those eyeing a refinance. Still, it’s wise to expect a gradual decline rather than any major drop in the short term.
Whether you’re looking to buy or refinance, staying flexible and well-informed will be essential. Here are a few things you can do now:
- Watch Rate Trends: Keep tabs on rates as they shift; even a slight dip can impact your monthly payment.
- Consult a Mortgage Expert: Talking to a lender or financial advisor can help you plan the right approach. They can help you explore options like rate locks or refinancing strategies that fit your situation.
- Think Long-Term Value: In Salt Lake’s market, choosing a home with long-term value might make sense, even if rates aren’t ideal just yet. With the right property, refinancing in a year or two could be a savvy move.
Today’s mortgage market may feel like a waiting game, but with informed planning and a good strategy, you can position yourself for a smart, satisfying home-buying experience when the time is right.
Salt Lake City Real Estate
If you’re thinking about buying or selling a home in or around Salt Lake City, we’re here to help! Whether you are selling a home to buy another, buying your first home, or relocating, we provide expert advice and service to help you navigate the local real estate market. Kevin Coyle of SLC Homes has the resources and expertise to assist you every step of the way. Contact us today to start your journey toward accomplishing your real estate goals!
