US Prime Rate Forecast Quarterly Trends: Oregon Economic Forecast (2024)

FAQs

Is the prime rate expected to go down in 2024? ›

Interest rates have held steady since July 2023.

The Fed raised the rate 11 times between March 2022 and July 2023 to combat ongoing inflation. After its December 2023 meeting, the Federal Open Market Committee (FOMC) predicted making three quarter-point cuts by the end of 2024 to lower the federal funds rate to 4.6%.

The Fed will likely continue cutting short-term rates through 2025 but will not return them to zero. Figure on the one-month Treasury bill's yield falling to about 3%, and the bank prime rate ending up around 6%, down from the current 8.5%, after the Fed is finished reducing its benchmark rate.

US Bank Prime Loan Rate is at 8.50%, compared to 8.50% the previous market day and 8.00% last year. This is higher than the long term average of 6.83%. The US Bank Prime Loan Rate measures the rate at which banks lend to their clients.

Unless something changes, like a significant uptick in unemployment, Durham thinks rates could stay relatively flat for a while. "I believe we will continue to see rates remain stagnant in the 7% and 6% range until into 2025 and potentially longer," says Durham.

The Fed signaling cuts equivalent to 75 basis points would put prime between 7.5% and 7.75%. This, of course, assumes the 30-year average spread between the fed funds rate and Prime holds. If rates are kept higher for longer, interest rate savings will be nominal in 2024.

US Prime Rate Forecast is at 5.76%, compared to 5.76% last quarter and 5.76% last year. This is lower than the long term average of 5.82%.

Projected Interest Rates in the Next Five Years

ING's interest rate predictions indicate 2024 rates starting at 4%, with subsequent cuts to 3.75% in the second quarter. Then, 3.5% in the third, and 3.25% in the final quarter of 2024. In 2025, ING predicts a further decline to 3%.

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%.

What was the highest prime rate? The highest prime rate was 21.5%, reached on December 19, 1980.

An interest rate forecast by Trading Economics, as of 12 May, predicted that the Fed Funds Rate could hit 5.25% by the end of this quarter - a forecast that has been materialised. The rate is then predicted to fall back to 3.75% in 2024 and 3.25% in 2025, according to our econometric models.

What is the prime rate over the last 12 months? ›

Basic Info. Bank Prime Loan Rate is at 8.50%, compared to 8.50% last month and 7.82% last year.

Generally, the prime rate is about 3 percent higher than the federal funds rate. That means that when the Fed raises interest rates, the prime rate also goes up. The prime rate is the rate at which individual banks and credit unions lend to their customers, including large corporations.

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In its March Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.8% in the first quarter of 2024 to 6.1% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the first quarter of 2025.

Today's national mortgage interest rate trends

If you're planning to refinance, the national average 30-year refinance interest rate is 7.07%, up 8 basis points from a week ago. Meanwhile, the average 15-year refinance interest rate is 6.60%, rising 16 basis points over the last week.

The Federal Reserve is likely to cut interest rates at least once in 2024, with the largest share of officials expecting three cuts. The timing and frequency of rate cuts will depend on a variety of factors, including inflation and the labor market.

In its March Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.8% in the first quarter of 2024 to 6.1% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the first quarter of 2025.

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%.

As recently as December 2023, the futures market gave March 2024 rate cuts a 77% probability of occurring. Even Fed officials themselves are predicting lower rates soon, with 17 of 19 projecting that the funds rate will be lower at the end of 2024 than it is now.