Crystal Ball - Will Mortgage Interest Rates Keep Going Up in 2024

[BLTtinkerbell]

If you had a crystal ball, would you see mortgage interest rates still going up in 2024? Please share your guesses and thoughts on the subject.

 

[kdonnel]

We are at March of 2002 rates.

I think 30 year mortgage rates will hover around 7.5 - 8.5 for 10-20 years.

I have no reason to think that other than that is just my feeling. Keep in mind I am a master of buying high and selling low. You may want to think or do the opposite of me.

 

[Mysterian]

 

[tvguy]

View attachment 785878

We are at March of 2002 rates.

I think 30 year mortgage rates will hover around 7.5 - 8.5 for 10-20 years.

I have no reason to think that other than that is just my feeling. Keep in mind I am a master of buying high and selling low. You may want to think or do the opposite of me.

Sooo, looking at your chart, it appears mortgage rates are closer to historic lows than to historic highs. So we have lots of room for mortgage rates to go up. And I am speaking as someone who JUMPED to buy a house in 1983 when mortgage rates fell to 12.25%.
While home sales have slowed, they haven't dropped. The average home here sells in 40 days. I sold my mom's house in 2013 to investors within 17 days of listing. They remodeled it and relisted it 3 months later and it sat for a full year. So a home selling in 40 days seems pretty good still.

 

[LuvOrlando]

Increasing in an ongoing way, no, not at all. They were manually nudged up because they were kept artificially low for a very long time, probably due to some 2008 cluster negotiation no-one clued us little people in on, but now the interest rates HAD to go back up or the system would have gone off the rails in a death spiral. Interest rates are sort of a penalty for not using cash, it is the cost of borrowing so if borrowing always stayed free it creates a mess in the give and take world of Finance. It is appropriate that borrowing be discouraged and that is what interest rates do.

These days I'm actually curious what will happen once all the people who have been saving to pay off their student loans do so in a few months, I think the windfall is underestimated and am not sure what it will do or how the markets will react. I mean, the system desperately needs liquidity so it is probably a good thing overall but markets can be quirky and lots of people like to bet against the US so a windfall could cause some momentary offbeat sloshing around. Best guess is it will make borrowing cheaper and interest rates could possibly dip, but you never can tell with such things since the outcome is in the hands of regular Americans who can sometimes be unpredictable. There is so much money in accounts right now and really, who is going to pay a regular person 7% in interest income for investments? Answer is no-one, my bank is still hovering at paying me nominally for savings and we all got burned by 401K antics the past few years, so literally the BEST way to make money right now is not spend it in interest. We paid off all our stuff since 2020 and now have way more money in hand from simply not paying 25% interest, so that is a lot multiplied by many many Americans. Looking at it logically, the only way I get to see 7% return is to pay the remaining student loans off with cool cash we saved when sitting still and the only way to make 25% is to not let balances sit on credit cards, so that's where I'm at & I suspect I am not the only person who reached the same conclusion. How this will pan out has my curiosity and attention, time reveals all things.

 

[tvguy]

we all got burned by 401K antics the past few years,

Well, I can say my wife and I didn't get burned by any 401k antics. We worked for different corporations with 401ks managed by different brokerages, and chose conservative options and what our 401ks did from 2011 to 2021 made it possible for us to retire over two years before our Social Security full retirement ages. Double digit gains every year.
The only mistake made was my wife went too conservative in her 401k options back in 2011.

 

[HeatherC]

I read somewhere that they could drop back into the 5’s by the end of next year. I’m personally feeling like 7 or 8 is where they may remain for quite some time.

 

[barkley]

well the banks and credit unions that are letting folks like me lock in cd rates of over 5% for upwards of 5 years have to find some means to meet that obligation so i don't see them dropping rates. going up? entirely possible even if the market is softening in (i purchased twice during 'buyers markets' and neither time were the rates anywhere near those low single digits of recent years).

These days I'm actually curious what will happen once all the people who have been saving to pay off their student loans do so in a few months,

did people actually save that money??? i keep hearing that people with student loans are going to be in a world of hurt when they start repayments again b/c they've either had to use the monies that previously went towards them to offset inflationary costs OR they've run up massive credit card debt that they are struggling to repay (just saw a news piece on how the u.s. topped the trillion dollar mark in consumer credit card debt after it increased 4.6% between the first and second quarter of this year-that's 45 billion dollars more in two quarters).

 

[LuvOrlando]

did people actually save that money??? i keep hearing that people with student loans are going to be in a world of hurt when they start repayments again b/c they've either had to use the monies that previously went towards them to offset inflationary costs OR they've run up massive credit card debt that they are struggling to repay (just saw a news piece on how the u.s. topped the trillion dollar mark in consumer credit card debt after it increased 4.6% between the first and second quarter of this year-that's 45 billion dollars more in two quarters).

Everyone I know put aside tens of thousands, now it is possible I just happen to be around very careful people or maybe there was a dramatic shift in mindset, again time will tell.

The credit card use I keep hearing about is possibly more about the fact that virtually all shopping has shifted to online. It is perceived as generally safer to use credit cards protective benefits when online shopping, nevermind cashback and awards which incentivize credit card use even for people who pay it off right away. I use credit all the time for online grocery shopping, that doesn't mean I can't pay cash it means my usage changed to save time. Yes, there are people struggling but the US has a lot of disposable income as well and people use credit for luxury vacations all summer and the vacations in July are probably hitting in August & back to school shopping is hitting now as well for store card sales, points and rewards. I always laugh when people point to increase in credit card use at the holidays as a harbinger of doom, I mean of course there is an uptick in certain seasons. The truth of financial stability probably lies more in how much doesn't get paid off 2 months later in a household sort of way and no one is measuring that long term accumulation of debt without cycling payments through as far as I can tell. If a family keeps 3K on a card but is actually rotating 10K through that account every month, well that is much different than just bulking it on in desperation - I don't see anyone making the distinction.

I'm not so sure the narratives in the news are on point, they seems to get a lot wrong lately.

 

[Frwinkley]

Everyone I know put aside tens of thousands, now it is possible I just happen to be around very careful people or maybe there was a dramatic shift in mindset, again time will tell.

The credit card use I keep hearing about is possibly more about the fact that virtually all shopping has shifted to online. It is perceived as generally safer to use credit cards protective benefits when online shopping, nevermind cashback and awards which incentivize credit card use even for people who pay it off right away. I use credit all the time for online grocery shopping, that doesn't mean I can't pay cash it means my usage changed to save time. Yes, there are people struggling but the US has a lot of disposable income as well and people use credit for luxury vacations all summer and the vacations in July are probably hitting in August & back to school shopping is hitting now as well for store card sales, points and rewards. I always laugh when people point to increase in credit card use at the holidays as a harbinger of doom, I mean of course there is an uptick in certain seasons. The truth of financial stability probably lies more in how much doesn't get paid off 2 months later in a household sort of way and no one is measuring that long term accumulation of debt without cycling payments through as far as I can tell. If a family keeps 3K on a card but is actually rotating 10K through that account every month, well that is much different than just bulking it on in desperation - I don't see anyone making the distinction.

I'm not so sure the narratives in the news are on point, they seems to get a lot wrong lately.

My DD is a dentist and has significant student loan debt. She graduated in May 2019, began making payments in Dec. 2019, and payments were suspended in April 2020. She paid herself each and every month for the last 3+ years as if she was paying her loans. She actually made money because her bank was paying between 3-4 percent interest. She and her husband are very disciplined; he is an engineer with significant income as well. They are very fortunate. Many, many people needed that money to survive, especially if they lost their job, hours were cut, etc. due to Covid.

 

[BLTtinkerbell]

Lots of great opinions and thoughts here.

 

[dvcgirl67]

View attachment 785878

We are at March of 2002 rates.

I think 30 year mortgage rates will hover around 7.5 - 8.5 for 10-20 years.

I have no reason to think that other than that is just my feeling. Keep in mind I am a master of buying high and selling low. You may want to think or do the opposite of me.

I'm not sure about 10-20 years....other than, like you said...having a feeling about it. But I agree rates will stay higher, for longer than we're used to in recent years. If was in the market for a mortgage I wouldn't wait around for rates to come down anytime soon.

We've been building up our cash reserves which we plan to live off of for the first 3-4 years of retirement and getting 5% returns is great. But, I keep a wary on the Fed Rate...because while they'd done some damage, they really haven't "broken" anything too big yet. The last few times they've rapidly raised rates they broke a whole lot, and rapidly came back down again. I keep reading that "this time is different".....that they'll keep rates higher for longer, like they did for most of the 90s. I wouldn't mind some stability in the markets....rather than the violent ups and downs. I guess I'll believe it when I see it.