2023 Mortgage Rate Predictions: All Eyes on Inflation

Another year has almost passed, which means it’s time 2023 Mortgage Rate Forecast,

I think we can all agree that the predictions for 2022 were some of the worst on record. after all, mortgage rates Never doubled from the year before.

Just about everyone (or really, everyone) got 2022 completely wrong, though you can’t blame them.

The year 2022 was the worst on record for mortgage rates, with fixed 30-year highs rising from the 2% range to more than 7%.

The year 2023 is expected to be more favorable in terms of mortgage rates, although you can never be 100% sure.

MBA 2023 Mortgage Rate Predictions

Q1 2023: 6.2%
Q2 2023: 5.6%
Q3 2023: 5.4%
Q4 2023: 5.2%

As always, we begin with the Mortgage Bankers Association (MBA), using the Their monthly mortgage finance forecast from the end of December (12/19/22).

Last year, they were way off, but then again, so was everyone else. Maybe they’ll do a little better in 2023.

To their credit, they were the only group that made a 4% 30-year forecast for the end of 2022, while other forecasters stayed in the high 3% range.

For the first quarter of 2023, they expect 30 years fixed 6.2% higher on average, which is basically close to today’s rates.

A year ago, MBA predicted a 30-year 3.2%, to provide some context for how high rates are today.

And while 6.2% sounds awful, it could have been worse with a 30-year fixed crossed 7% in November,

For the subsequent quarters, MBA actually expects things to improve further, with a 30-year assured decline of 5.6% in Q2 2023.

Then up to 5.4% in the third quarter and eventually 5.2% to close out 2023, which doesn’t sound half-bad.

Remember, it appears mortgage rates were headed for 8% Inflation concerns have eased ahead of the recent correction.

In 2024, they expect the 30-year average to be an even better 4.4%. It’s something to look forward to, and strengthens the argument for taking one out. adjustable-rate mortgage In the meantime

Fannie Mae 2023 Mortgage Rate Forecast

Q1 2023: 6.5%
Q2 2023: 6.4%
Q3 2023: 6.2%
Q4 2023: 6.0%

Now we’ll take a look at Fannie Mae’s 2023 mortgage rate predictions, drawn From their most recent housing forecast from mid-December (12/12/22).

They are pegged to average 6.5% for the 30 year in the first quarter, before falling to 6.4% in Q2 and further improving in the second half of 2023.

It eventually goes up to 6.2% and then 6.0%, which is close to current levels. But I expect their forecast to be adjusted lower if inflation continues to ease.

Clearly they are playing conservatively in 2022 after getting so much wrong. But then again, so is everyone.

A year ago, Fannie didn’t see the 30-year fixed rate exceed 3.4%. What a difference a year makes, eh?

Freddie Mac 2023 Mortgage Rate Predictions

Q1 2023: 6.6%
Q2 2023: 6.5%
Q3 2023: 6.4%
Q4 2023: 6.2%

Brother Freddie Mac released the quarterly forecast, which was the last Free in mid-October. As such, his predictions may be a bit higher than the rest.

I imagine when they issue their next update in January, they’ll lower their estimates a bit for each quarter.

But as it stands, they see returns below the 30-year average of 6.6% in the first quarter, 6.5% in Q2, 6.4% in Q3, and finally 6.2% to close out 2023.

If they make a positive change to their next forecast, we could see their forecasts being downgraded by about 20 basis points each quarter.

So it may take 6.4%, 6.3%, 6.2%, and finally even 6%. That seems about right, as it would closely match Fannie Mae’s forecast.

We will know more towards the end of January 2023 when the next update comes out.

NAR 2023 Mortgage Rate Outlook

Q1 2023: 6.1%
Q2 2023: 5.7%
Q3 2023: 5.6%
Q4 2023: 5.5%

Then there’s the National Association of Realtors, or NAR, which releases the monthly US Economic Outlook.

his latest report good Mortgage Interest Rates Reveal Big Drop for December 2022 (12/13/22).

They’ve got a 30-year average of 6.1% in Q1 2023, then fell to 5.7% in Q2.

This certainly could help re-energize the housing market during the traditional spring buying season.

After that, things get even better, albeit only slightly. The NAR is expected to improve further by 10 basis points each quarter over the 30-year fixed term, closing the year at 5.5%.

Interestingly Realtor.com has My The forecast, which says mortgage rates will average 7.4% in 2023, but fall to 7.1% by the end of the year.

The Truth’s Mortgage Rate Predictions for 2023

Q1 2023: 5.75%
Q2 2023: 5.75%
Q3 2023: 5.5%
Q4 2023: 5.0%

I think it’s safe to say that I got 2022 wrong when it comes to mortgage rates. So hopefully my 2023 predictions will be a bit more accurate.

We’ve already seen evidence of mortgage rates trending in the right direction (down), and I believe this should continue into the new year.

Finally, inflation appears to be cooling down after peaking a few months ago and should return to historical norms.

This should allow mortgage lenders to continue reducing mortgage rates as more data is released to bolster that claim.

Of course, we won’t go back to all-time lows or anywhere near that, but we may see better rates in 2023.

As always, expect a bumpy ride throughout the year as events unfold and data is released. And pay extra attention to the difference in rates between lenders.

With mortgage rates no longer on sale, you need to do more shopping around to make sure you get the best deal available.

In general, I expect market watchers and forecasters to err on the side of caution for their 2023 mortgage rate predictions.

While there is a glimmer of hope, you don’t want to get caught on the wrong side again.

Other Miscellaneous 2023 Mortgage Rate Predictions

wells fargo recent noted It expects the 30-year average to be fixed at 6.16% in 2023, before lowering a full percentage point to 5.16% in 2024.

redfin Said It expects the 30-year “to decline gradually to approximately 5.8% by the end of the year.”

He believes rates will drop to 6% in early 2023 before “settle down to around 5.8% for the rest of the year”. And the average 2023 home buyer will forego rates of about 6.1%.

First US Chief Economist Mark Fleming Said“If inflation declines toward the Fed’s target range in the second half of 2023, as is currently expected, it is possible that mortgage rates could decline modestly in the second half of the year.

He added that while mortgage rates will remain relatively high relative to pandemic-era lows, stable and/or modestly lower mortgage rates could boost the so-called housing market potential in 2023.

Finally, while Zillow does not provide accurate mortgage rate predictions, they do note That they continue to rule out the possibility of double-digit price declines for the country as a whole in 2023, partly due to improving mortgage rates.

Read more: 2023 Mortgage and Real Estate Predictions

(Photo: marco verch,

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