How far will home loan rates fall in November?

High inflation and the high interest rates meant to tame it have plagued borrowers in recent years. But even in that high borrowing cost environment, home loans remained an option worth considering for those willing to tap the value of their home. Since this one mortgage loans and lines of credit (HELOCs) are backed by your home, they typically have a lower interest rate than credit cards and other types of loans.

Fortunately, the credit environment is also changing for the better. Inflation is falling and the Federal Reserve cuts interest rates by 0.50% in September. With the Fed’s upcoming meeting on November 6 and 7 – and another meeting scheduled for December – some economists expect further rate cuts, which could make borrowing more affordable.

Although recent developments seem promising, nothing is certain. Interest rates for various types of loans, including interest on home equity, rose slightly in October. From November 1, 2024, mortgage loan and HELOC rates are on average 8.35% and 8.68%respectively. So could the events of November reduce home loan rates, and if so, to what extent?

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How far will home loan rates fall in November?

Let’s take a look at what could happen to home loan rates in November and how it could affect you.

A small decrease in interest rates on home loans is possible

If the Fed cuts the Federal Funds Rate, as some expect, there will be a corresponding decline equity loan And HELOC rates would be possible. CME Group’s FedWatch Tool indicates there is a 98% chance the bank will cut rates at its November meeting. If that happens, both new and existing HELOC rates could drop because they are variable and adjust monthly.

In contrast, home loan rates may not see an immediate impact from a Fed rate cut they are usually fixed and don’t adjust like HELOC rates.

“If the Fed cuts rates by a quarter point, you might see HELOC rates drop by a quarter,” said Mason Whitehead, branch manager at Churchill Mortgage. “I don’t think anyone expects another 50 basis point rate cut, and there’s talk of not seeing a rate cut at all.”

Jeremy Schachter, branch manager at Fairway Independent Mortgage Corporation, shares a similar view, but points to December as a possible turning point.

“I don’t expect the Federal Reserve to cut rates at their next meeting on November 6-7. However, they will meet one last time in mid-December before 2024. Depending on the economic news that comes out, the Feds could cut rates. then,” says Schachter.

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Interest rates on home loans are likely to remain stable

If you think about it tapping into your equity for cash, you may find slightly lower rates in November. Keep in mind that some experts expect interest rates to stay the same or drop only slightly in the short term.

“I expect home loan rates to remain the same in November,” says Schachter. “The Federal Reserve made a big drop of 0.50% in September. Since then, other economic data has emerged indicating that the labor market is still very strong.”

Schachter believes the direction of home loan interest rates may depend in part on the upcoming November jobs report by the U.S. Bureau of Labor Statistics.

“If the economy is still hot, I don’t expect the Federal Reserve to cut rates in November,” Schachter said.

Whitehead expects an increase in interest in HELOCs and expects interest rates to remain flat or decline slightly.

“HELOC rates are typically tied to prime rates, so they are affected when the Fed lowers or increases the federal funds rate. I think these rates will remain flat, but if the Fed cuts rates in November, you’ll see possibly a small drop in HELOC rates – not much to be excited about, but every little bit helps,” says Whitehead.

The bottom line

While a 0.25% interest rate cut in November can help you save money, keep in mind that this is not guaranteed and, depending on the amount you borrow, the potential savings may not be substantial. Since you can’t predict with 100% certainty whether interest rates will rise, fall or remain stable, you can focus on what you can control. If you feel comfortable with the payments and the loan fits your financial goals, moving forward may make sense.

“A mortgage loan doesn’t have to be a quick decision, but rather one that fits into your long-term financial goals,” says Alex Beene, a financial literacy instructor at the University of Tennessee at Martin. “If you use it sparingly and want to add value to your life, either for an investment in yourself or for something you want to sell in the short or long term, then it could be a smart decision. If you don’t have that plan as outlined , it’s a risk you shouldn’t take.”