With the end of the year coming on fast, we thought it was time for an updated mortgage rate forecast for Seattle-area home buyers. Specifically, we’ll look at two recent forecasts published by leading economists and housing analysts.
Here’s the short version: The latest predictions suggest that home loan interest rates could trend downward over the coming months. That would be a welcome change for borrowers, after the surge in rates we saw over the past couple of years.
Home Loan Interest Rates Surged in 2022 and 2023
Seattle mortgage rates rose sharply during 2022 and 2023, surprising industry analysts and home buyers alike. The average rate for a 30-year fixed mortgage (the most popular home loan option) jumped from 3.2% in early January 2022 to a high of 7.79% in October 2023.
Rates have declined a bit since then, signaling that the surge might be over.
During the last week of January 2024, the average rate for a 30-year fixed home loan dropped to 6.6% (the lowest level since May 2023). During that same week, the average rate for a 15-year fixed fell to 5.76%. These numbers are based on the weekly nationwide survey conducted by Freddie Mac, the government-sponsored mortgage buyer.
According to the latest report from Freddie Mac:
“Mortgage rates decreased this week, reaching their lowest level since May of 2023. This is an encouraging development for the housing market and in particular first-time homebuyers who are sensitive to changes in housing affordability. However, as purchase demand continues to thaw, it will put more pressure on already depleted inventory for sale.”
Now, a lot of Seattle-area home buyers are wondering the same thing. Will Seattle mortgage rates drop in 2024, as they have in recent weeks? Or will they trend upward again?
Seattle Mortgage Rate Forecast for 2024
Due to the many variables involved, no one can predict future mortgage rates with total accuracy. But that doesn’t stop economists from trying. And a pair of recent forecasts suggest that mortgage rates in Seattle and across Washington could decline further during 2024.
These predictions bode well for home buyers who are planning to make a purchase next year. So let’s take a look at them one at a time.
Forecast #1: A few weeks ago, Freddie Mac issued a quarterly housing market and mortgage industry forecast extending through 2024. In it, they predicted that mortgage rates nationwide would trend downward over the next year or so. Specifically, they issued a quarter-by-quarter prediction that 30-year loan rates would average 6% in 2024.
Forecast #2: A more recent forecast from the Mortgage Bankers Association (MBA) predicted a similar trend. The MBA’s analysts said they expect 30-year mortgage rates to dip down to 6.1% at the end of 2024 and drop even more to 5.5% by the fourth quarter of 2025.
But it’s worth repeating: mortgage rate forecasts are the equivalent of an informed guess and thus far from certain. So we shouldn’t get too hung up on the precise numbers being forecasted here. The point is, if these forecasters are anywhere near accurate, Seattle mortgage rates could level off in their current range — and possibly drop during 2024.
A Cooler Housing Market Next Year?
The rise in mortgage rates we experienced during 2022 and 2023 is one of several factors that have cooled the Seattle housing market. Higher housing costs, inflation, and economic uncertainty have all contributed to that trend. It’s just one of those recurring real estate cycles we go through from time to time.
While home buyers might be discouraged by today’s higher mortgage rates, we should keep them in perspective. Last week, the average interest rate for a 30-year fixed mortgage was 6.6%. And while that’s an increase from the same time a year ago, it’s still a good rate from a broader historical standpoint. In the 1980s, for example, 30-year mortgage rates averaged as high as 17%.
Additionally, a cooler real estate market could actually benefit Seattle-area home buyers. The frenzied, high-pressure market of 2021 has settled into a slower pace. As a result, buyers can now take more time to consider each property, research sale prices, and take other important steps prior to making an offer.
Ready to Explore Your Financing Options?
Planning to buy a home in the Seattle area during 2024? Need a mortgage loan to make it happen? If so, we can help.
Sammamish Mortgage servers home buyers and homeowners all across the state of Washington. We offer a wide range of financing options, including FHA, VA and conventional. Please contact us if you would like to receive a rate quote or apply for a home loan.