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Rising Mortgage Rates: Causes And 2024 Rates Forecast

April 26, 2024 7-minute read

Author: Kevin Graham


Last updated: January 2, 2024

We’re currently coming off a cycle of mortgage rates rising, though the market has recently started to swing the other way. Mortgage rates over time behave quite a bit like a swinging pendulum. Whether you’re a current homeowner or potential home buyer, it’s important to understand how mortgage rates work so you can take advantage of timing for your home loan.

What Causes Mortgage Rates To Increase?

There are a number of factors that can cause mortgage rates to rise. Several of them are actually interrelated.

  • Housing market: Mortgage rates are based on demand for mortgage-backed securities (MBS) in the bond market. Predictions of a sharp rise in defaults on mortgage payments underlying these MBS may cause investors to be more inclined to stay away from the market, which would cause bond yields and rates to go up to attract investors again.

  • Federal Reserve Bank: The major mandate of the Federal Reserve Bank (Fed) is to maximize employment while stabilizing prices. The primary avenue for balancing these often opposed goals is changing the target range for the federal funds rate. When the target range gets higher, mortgage rates rise along with many others.

  • Inflation: A little bit of inflation keeps the economy going because people buy now, but too much can make the money you currently have worth substantially less than it was when you earned it. A higher federal funds rate makes it more expensive to borrow money. If people don’t have access to cheap funds, they spend less, and prices fall.

  • Economic growth: Economic growth is undoubtedly great, but you can also have too much of a good thing. In boom times, the unemployment rate is low enough that employers may have a hard time finding workers, which leads to higher wages. Higher wages mean people may be willing to pay a higher price for goods and services, leading to inflation. The Fed may raise rates to slow economic growth and tamp down inflation.

How Are Interest Rates Determined?

Broadly speaking, there are two categories of items that impact the mortgage rate anyone gets. More specifically, there are market factors and personal financial profile factors.

Market factors are all about the interplay between the housing market, economic growth, the Federal Reserve and inflation. So everything mentioned in the section above has a major impact on daily movements in mortgage rates.

However, the second factor that you have much more control over is your personal financial profile. There are three big things any lender looks at when determining your personal interest rate: your down payment or equity, your credit score and how you plan to occupy the property.

Generally speaking, the higher your down payment (or amount of existing equity left in the home after a refinance), the better your rate is going to be. If your lender doesn’t have to give you as much money to fund the transaction, it’s less risky.

If you have a higher credit score, this means your borrowing history has shown you to be a financially responsible applicant who should be able to get a more favorable rate than someone with a credit score that’s noticeably lower.

It also matters how the home will be used. You’ll usually get the lowest rates on a primary home because if you get into trouble financially, lenders anticipate you’ll prioritize the payment on the home you live in. For this reason, you can expect a slightly higher rate on second homes and investment properties.

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2023 Mortgage Rate Recap

In general, mortgage rates maintained a steady ascent throughout 2023. Only recently have mortgage rates fallen as a result of indications that the Federal Reserve will likely look to lower the federal funds rate at some point in 2024.

The following interest rates come from 2023 – the first week of January, the third week of June and the end of the year according to the Freddie Mac Primary Mortgage Market Survey®.


Average Mortgage Rate

Early 2023




Late 2023


Mortgage Rate Forecast For 2024

Trying to predict mortgage rates is a bit like guessing whether a dog will go for a beef or peanut butter treat first. Your guess is as good as anyone else’s. While the market could go any which way, some prominent industry players have made predictions.

While they all continually update, some forecasters, like Freddie Mac and National Association of Home Builders, don’t break their predictions out by parts of the year.

Housing Authority

Early 2024


Late 2024

Freddie Mac

6% – 7%

6% – 7%

6% – 7%

Fannie Mae




Mortgage Bankers Association




National Association of Home Builders




Of course, mortgage rates are just one of many 2024 housing market predictions. Inventory and prices also matter quite a bit to the budget of the average home buyer.

Tips For Getting A Good Mortgage Rate During This Time

Despite the current activity in the economy and ever-present uncertainty around rates, life continues to chug along, and you should too. If you’re in the process of buying a home, consider the following tips to make the most of your money:

Shop Around For A Lender

It’s always important to shop in a timely fashion to find the best loan for your specific situation. As you’re choosing a mortgage lender, remember to consider rates and loan terms alongside factors that may not appear on paper, such as the reputation of the lender and the quality of client service you’re going to receive.

After all, you’ll likely be making payments on your home for a long time, so it’s imperative to work with a lender you can trust. Be sure to compare apples to apples regarding the type of loan as well as the cost (possible mortgage discount points) for the rate you’ll obtain.

Once you find a lender, you should also take the time to get preapproved, which determines how much money you can borrow to buy a home. Having a preapproval will help you better understand how much home you can afford while also indicating to sellers that you’re a serious buyer with secured financing.

Get A Mortgage Rate Lock

Many lenders, including Rocket Mortgage®, offer a mortgage rate lock, which allows homeowners to secure a set interest rate during loan processing. This means that regardless of what’s happening in the economy, your interest rate will stay the same for a set period, typically about 45 days.

But keep in mind that you’ll only reap the benefits of a mortgage rate lock if you’re able to close on your loan during the lock period – otherwise, your locked rate may expire.

Know Your Future Options

If you get a mortgage while interest rates are higher than you’d prefer, it may be comforting to remember that you can always refinance your loan for better rates if you qualify when they go back down. And if waiting on mortgage refinancing while buying now means securing your dream home, it’s probably worth it to pay a bit more in interest in the meantime.

Wondering when to refinance? There’s no definitive perfect time, so keep an eye on the market and take advantage of the opportunity when you see a promising rate.

FAQs About Mortgage Rates Rising

Now that we’ve gone over the basics of getting a mortgage while rates are rising, let’s answer a few of your frequent questions.

Why are mortgage rates going up?

As of January 2, 2024, mortgage rates seem to have switched back to a downward cycle. However, there are some general things we can say about the conditions in which mortgage rates tend to rise. Typically, mortgage rates are rising because inflation is going up and the Federal Reserve has changed the target on the federal funds rate to get prices back under control.

Will mortgage rates drop in 2024?

No matter the direction, it’s hard to definitively say where mortgage rates are going. What we can say is that the Federal Reserve has made some indications that they might look to lower the federal funds rate in 2024. If that were to happen, that’s the kind of event that could lead to lower mortgage rates.

How do I find the best mortgage rate?

It never hurts to shop around. Mortgage lenders have to remain competitive in their pricing. The question of how to get the best mortgage rate also comes down to personal financial factors like your credit score and the size of your down payment. Unlike the market itself, this is an aspect of rates that is completely within your control.

What is the current mortgage rate?

The most recent data from Freddie Mac for the week of December 28, 2023, shows that the average rate on 30-year fixed-rate mortgages is 6.61%. However, there can be wide variability in rates depending on your loan term, the size of your down payment, whether you’ll live in the home and whether your rate is fixed or variable.

When should I lock in my mortgage rate?

People try to time the market when locking in a mortgage rate. That’s incredibly hard to do. The best way to answer this question is probably to say that you should lock your rate as soon as you can if you see one that’s low compared to recent trends, enabling you to have a payment you’re truly comfortable with. You can also rely on one of our Home Loan Experts for guidance.

The Bottom Line

Buying a house is a long-term investment, but don’t get so hung up on the financials that you forget the most important piece: finding a house you can call home. If you find your dream house, don’t let rising rates stop you from turning your dream into a reality.

Remember: Current interest rates are considered normal from a historical perspective, and you can always choose to refinance for a lower rate later on.

If you feel ready to move forward, you can take the next step and start your mortgage application.

Get approved to buy a home.

Rocket Mortgage® lets you get to house hunting sooner.


Kevin Graham

Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Mortgage, he freelanced for various newspapers in the Metro Detroit area.