Mortgage interest rates expected to drop in 2024—here's how much you could save on monthly payments

If you were priced out of the housing market in 2023, you might have better luck finding an affordable home in 2024.

Mortgage rates are expected to decrease by nearly 1% by year’s end — from 6.6% down to as little as 5.75% — according to recent housing forecasts. That’s good news for buyers, as the decrease would reduce their monthly mortgage costs by roughly $200 for a median-priced home.

On Thursday, 30-year fixed mortgage rates slid to 6.6% after peaking at 7.79% in October 2023, per Freddie Mac data. That’s the lowest they’ve been since May 2023.

Rates in 2024 are expected to “moderate toward a more normal level,” with 30-year fixed averages dropping below 6% by the end of the year, according to a revised outlook published by Fannie Mae’s Economic & Strategic Research group on Thursday.

This lines up with other recent projections:

How much less mortgage payments could be in 2024

Assuming you make a 20% down payment on a median-priced home worth $431,000, the total monthly cost of a mortgage would drop by as much $190, according to CNBC Make It’s mortgage calculator. Here’s a look at the estimated totals based on projected 30-year fixed interest rates:

6.6% (current rate): $2,202
6.1%: $2,089
5.75%: $2,012

Over the course of the entire mortgage, that could amount to around $68,000 saved on interest.

Note that the totals are for the mortgage amount only and do not include additional expenses like private mortgage insurance, home insurance and property taxes.

While a reduced mortgage rate would provide some measure of cost relief to homebuyers, home prices are also expected to rise in 2024.

The National Association of Realtors expects a modest home price increase of 0.9% from 2023, Fannie Mae projects 2.4% and business intelligence company CoreLogic forecasts a year-over-year gain of 2.5%, as of November 2024. However, it’s worth noting that home price growth can vary considerably by region.

Whether it’s a good time to buy a home will depend on your personal finances and where you want to live. While a 1% drop in mortgage rates might not offer enough cost relief on its own, declining home prices in some regions — especially Florida — could make the difference.

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