WSJ Prime Rate Forecast (2024)

FAQs

What is the prime rate prediction for 2024? ›

US Prime Rate Forecast is at 5.76%, compared to 5.76% last quarter and 5.76% last year.

Trading Economics offers a more optimistic outlook, predicting a rise to 5% in 2023 before falling to 4.25% in 2024 and 3.25% in 2025. This forecast is supported by Morningstar's analysis, which projects rates between 3.75% and 4%.

What is the current prime rate? The current prime rate is 8.50%.

The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%. Meanwhile, Wells Fargo's model expects 5.8%, and the Mortgage Bankers Association estimates 5.5%. ResiClub takes all forecasts with a grain of salt.

As recently as their last meeting on March 20, the officials had projected three rate reductions in 2024, likely starting in June. But given the persistence of elevated inflation, financial markets now expect just one rate cut this year, in November, according to futures prices tracked by CME FedWatch.

Mortgage rate predictions 2024

The MBA's forecast suggests that 30-year mortgage rates will fall into the 6.4% to 6.7% range throughout the rest of 2024, and Fannie Mae is forecasting the same. NAR believes rates will average 7.1% this quarter and fall to 6.5% by the end of 2024.

The answer: probably not in 2024. In Fannie Mae's May housing forecast, the government-sponsored enterprise said it expects 30-year fixed rates to end 2024 at 7% and 2025 at 6.6%. The Mortgage Bankers Association predicts the rate will drop to 6.5% by the end of the year and 5.9% by the end of 2025.

After all, higher rates equate to higher minimum payments. So, you may be wondering if, and when, mortgage rates might fall to 3% or lower again - and whether or not it's worth waiting to buy a home until they do. Although rates could fall to 3% again one day, it's not likely to happen any time soon.

Will 2024 be a good time to buy a house? ›

Yes. This is the best time to buy a house in California. With the current trend in the CA housing market, you'll find better deals on your dream home during Q2 2024. As per Fannie Mae, mortgage rates may drop more in Q2 of 2024 due to economic changes, inflation, and central bank policy adjustments.

What Is the Current Prime Rate? As of May 20, 2024, the current prime rate is 8.50%, according to The Wall Street Journal's Money Rates table. This source aggregates the most common prime rates charged throughout the U.S. and in other countries. The federal funds rate is currently 5.25% to 5.50%.

What is the highest prime rate in history? The highest prime rate in history was on December 19, 1980, standing at a record-breaking 21.5%. The Federal Reserve set the federal funds rate guidance to sustain the 21.5% prime rate until January 1, 1981.

The WSJ prime rate provides a gauge for the prime rate at banks across the industry. The WSJ prime rate has historically been approximately 3% higher than the federal funds rate. Thus, the rate is heavily influenced by the Federal Reserve's monetary policies.

The prime rate does not change at regular intervals. It changes only when the nation's "largest banks" decide on the need to raise, or lower, their "base rate".

Here's a quick comparison: From mid-December 2023 to mid-February 2024, the midpoint for one-year CD rates at 21 online banks and credit unions dropped from 5.30% to 5.00% annual percentage yield, according to a NerdWallet analysis. While not drastic, more rate drops may be coming.

On the basis of these inflation forecasts, average consumer price inflation should be 3.1% in 2024 and 1.9% in 2025, compared to 4.06% in 2023 and 9.59% in 2022.

But after two years of increases, there are strong indications that auto loan rates could start to come back down in 2024 — perhaps by a substantial amount.

CD rates should remain fairly attractive in 2025

Just as the Fed raised interest rates when inflation soared, the central bank is expected to start cutting interest rates now that inflation has cooled.