October 26, 2023
In the final months of 2022, housing market watchers thought a housing market recovery would begin sometime after the 2nd quarter of the new year.
Sadly, those predictions did not come true. And now, a similar analysis is happening now in ahead of the house hunting season in the spring of 2024.
What’s ahead in the new year for mortgages, interest rates, and the housing market?
State Of The Mortgage Industry Late 2023
U.S. News and World Report notes that mortgage rates have stayed higher, for longer. And they aren’t the only ones discussing those higher rates affecting the 2024 housing market, too.
According to Investopedia, the national average interest rate exceeds 8%. And while that number is subject to change in smaller increments day to day or even month to month, rates are awfully close to 10% at press time.
Looking At The Future
According to a U.S. News and World Report article, 30-year fixed rate conventional mortgages are, expected to remain above 6.5% through the remainder of 2023.” And that is likely to carry on into 2024.
Higher rates are due in part to the Federal Reserve and their interest rate hikes “essentially putting a floor under mortgage rates.
In other words, rates may not rise meaningfully in the coming months,” the article notes, but they aren’t likely to drop either.
FHA Loan Options
There are strategies to consider if you’re buying a home in the current housing market. One approach is to consider an FHA adjustable rate mortgage. Whatever loan you choose, consider saving more money to make a larger down payment.
Some may change their minds about how long to keep the home purchased with a higher interest rate. Buying a smaller home until you grow out of it was a strategy many took for granted before mortgage rates surged to their current levels.
But is that approach best today?
Rethink any long-term plans you might have made when rates were lower. You need a home loan option that makes more financial sense in the current economy and many borrowers purchase today with an eye on refinancing as soon as it makes sense to do so.
As mentioned above, an adjustable rate mortgage may help.
Do not assume conditions will improve quickly and in the short term. Assume higher rates are the norm for now and budget accordingly for the best results.
Are you hoping for interest rates to drop in the next 6-12 months? That may not be realistic. It may take longer before you can refinance into a better rate, and it makes sense to assume you’ll have to wait.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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