Future of the Housing Market: Anticipating Mortgage Rates in 2024, as Per the Insights of 8 Prominent Research Organizations

**Mortgage Rates Surge to 7.19%: Impact on U.S. Housing Affordability**

**Record Breaking Mortgage Rates**

On Friday, the average 30-year fixed mortgage rate jumped to 7.19%, the second highest recorded rate since early November. This surge in mortgage rates signifies another decline in U.S. housing affordability.

**Decline in Housing Affordability**

The increase in mortgage rates has a direct impact on housing affordability. For example, a borrower who secured a $500,000 mortgage at a fixed rate of 5.99% in early February 2023 would have had a monthly payment of $2,995 for principal and interest. However, at the current rate of 7.19%, the same borrower would face a monthly payment of $3,391 for a loan of the same size.

**Factors Affecting Housing Affordability**

Economists emphasize three factors that can improve housing affordability: increasing incomes, decreasing home prices, and lowering mortgage rates. Of these factors, mortgage rates have the most significant influence in the short term. This is due to the fact that home prices tend to be sticky, and income growth has limitations even in a robust labor market.

**Mortgage Rate Forecasts**

To gain insight into where mortgage rates are heading, Fortune tracked down mortgage rate forecasts from nine leading research firms. While it is important to acknowledge the challenges in predicting future rates, these forecasts provide some indication of potential trends:

1. The Mortgage Bankers Association: The trade group projects that the 30-year fixed mortgage rate will average 5.9% in Q4 2023. They expect rates to slide to 4.9% by Q4 2024.
2. Morningstar: Economists at Morningstar project that the average 30-year fixed mortgage rate will average 6.25% in 2023, 5.0% in 2024, and 4.0% in 2025.
3. Goldman Sachs: The investment bank projects that the 30-year fixed mortgage rate will end 2023 at 6.4%. In 2024, they expect the rate to average 5.9%.
4. The National Association of Realtors: Economists at NAR forecast that the 30-year fixed mortgage rate will slide to 6.4% before the end of 2023, and then to 6.0% in 2024.
5. Morgan Stanley: The Agency MBS strategists at Morgan Stanley project that the 30-year fixed mortgage rate will start 2024 at 6.0%.
6. Moody’s Analytics: Moody’s projects that the 30-year fixed mortgage rate will average 6.5% through most of 2023. They expect the rate to slide to 6.0% by the end of 2024, and then hit 5.5% in 2025.
7. Realtor.com: Economists at the home listing site believe the 30-year fixed mortgage rate will start 2024 at 6.1%.
8. Fannie Mae: Economists at Fannie Mae forecast that the 30-year fixed mortgage rate will average 6.6% in Q4 2023. They expect rates to grind down to an average of 5.9% in Q4 2024. For the calendar year, Fannie Mae expects mortgage rates to average 6.1% in 2024.

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