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Mortgage Rate Forecast 2023: All Eyes on Inflation

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Another year is almost over. which means it is time for 2023 Mortgage Rate Forecasts.

I think we can all agree that the 2022 forecast is the worst on record. After all, mortgage rates Never doubled in one year before.

Almost everyone (or really everyone) has 2022 all wrong, although you can’t blame them.

2022 was the year with the worst mortgage rates on record, with the 30-year flat rising from a high of 2% to more than 7%.

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Hopefully 2023 will be better in terms of mortgage rates. Although you can’t be 100% sure.

MBA 2023 Mortgage Rate Forecast

First Quarter 2023: 6.2%
Second Quarter 2023: 5.6%
Third Quarter 2023: 5.4%
Fourth Quarter 2023: 5.2%

As always, we started with the Housing Bankers Association (MBA). using Monthly Mortgage Finance Forecast from Late December (12/19/22)

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Last year they went a long way. But then again, so are the others. Maybe they can do a little better in 2023.

Credit them as the only group that forecasts a flat 4% 30-year by the end of 2022, while other forecasters are in the high 3% range.

For the first quarter of 2023, they expect fixed for 30 years It’s on average much higher at 6.2%, which is basically close to the current rate.

Last year, the MBA predicted a flat rate of 3.2% over 30 years to provide context for how higher rates are today.

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And while 6.2% doesn’t sound like much, But it could be worse with a 30-year constant. surpassed 7% in November.

For the quarters ahead, the MBA expects things to actually get better, with the 30-year constant decreasing to 5.6% in Q2 2023.

Then down to 5.4% in the third quarter, and finally 5.2% to close out 2023, which doesn’t sound bad at all.

Remember that mortgage rates are listed. heading for 8% before picking up when concerns about inflation subside

In 2024, they expect the 30-year constant to average an even better 4.4%. adjustable rate mortgage In the meantime

Fannie Mae 2023 Mortgage Rate Forecasts

First Quarter 2023: 6.5%
Second Quarter 2023: 6.4%
Third Quarter 2023: 6.2%
Fourth Quarter 2023: 6.0%

Now let’s take a look at Fannie Mae’s mortgage rate forecast for 2023. pull Based on the latest housing forecast from mid-December (12/12/22).

They had an expensive 30-year fixed average of 6.5% in the first quarter before declining to 6.4% in Q2 and improving further in the second half of 2023.

It eventually moved to 6.2% and 6.0%, which are close to current levels. But I expect their forecasts to be revised lower if inflation continues to fall.

They’re obviously playing conservatively after making a huge mistake in 2022, but so are everyone.

Last year, Fannie didn’t see the 30-year constant going above 3.4%. How does a year make a difference?

Freddie Mac 2023 Mortgage Rate Forecast

First Quarter 2023: 6.6%
Second Quarter 2023: 6.5%
Third Quarter 2023: 6.4%
Fourth Quarter 2023: 6.2%

Brother Freddie Mac Releases Quarterly Forecast, Final dissemination in the middle of October Therefore, their forecast may be slightly higher than the rest.

I think they’ll lower their estimates a little bit for each quarter. When they release their next update in January.

but as it is They see the 30-year flat average coming in at 6.6% in the first quarter, 6.5% in the second quarter, 6.4% in the third, and eventually dropping to 6.2% to close out 2023.

If they make positive changes in their next forecast We may see their forecast drop by about 20 basis points each quarter.

That might even look like 6.4%, 6.3%, 6.2%, and finally 6%. That sounds right, because it matches Fannie Mae’s predictions so well.

We should know more at the end of January 2023 when the next update comes out.

NAR Mortgage Rate Outlook 2023

First Quarter 2023: 6.1%
Q2 2023: 5.7%
Third Quarter 2023: 5.6%
Fourth Quarter 2023: 5.5%

Next up is the National Association of Realtors, or NAR, which releases its monthly U.S. economic outlook.

their latest report December 2022 (12/13/2022) reveals that the interest rate for home loans has dropped drastically.

They had a 30-year steady average of 6.1% in Q1 2023, then dropped to 5.7% in the second quarter.

That can certainly help energize the housing market during the traditional spring buying season.

Things got better after that, albeit slightly. NAR expects the 30-year constant to improve another 10 basis points each quarter, closing the year at 5.5%.

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

Real Mortgage Rate Forecast 2023

First Quarter 2023: 5.75%
Q2 2023: 5.75%
Third Quarter 2023: 5.5%
Fourth Quarter 2023: 5.0%

I think it’s safe to say I got 2022 all wrong when it comes to mortgage rates. Hopefully my 2023 predictions are a bit more accurate.

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

In the end, inflation appears to have cooled after peaking a few months ago. And it should fall back on the norm of the past.

This should allow mortgage lenders to continue lowering mortgage rates as more information is disclosed to support that claim.

We are certainly not going to return to an all-time low or near it. But we should see much better rates in 2023.

As always, expect a bumpy journey throughout the year when events take place. occurred and information was disclosed. And pay special attention to rate differences between lenders.

Because mortgage rates are no longer being sold. You have to buy more to make sure you get the best deal.

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

Even if hope is dimmer But you don’t want to get caught again.

Miscellaneous Mortgage Rate Forecast 2023

Wells Fargo recently notice It expects the 30-year constant to average 6.16% in 2023 before fully easing the percentage to 5.16% in 2024.

redfin say The 30-year constant is expected to “gradual decline to about 5.8% by the end of the year.”

They believe the rate will ease to 6% in early 2023 before “falling to about 5.8% for the remainder of the year” and that the average homebuyer in 2023 will spike the rate about 6.1%.

Mark Fleming, the first American chief economist say“If inflation slows to the Fed’s target range in the second half of 2023 as currently expected, It’s possible that mortgage rates could drop slightly in the second half of the year.

He added that although mortgage rates are still high by comparison to pandemic-era lows, But flat and/or slightly lower mortgage rates could boost the potential of the housing market in 2023.

Finally, although Zillow doesn’t predict all mortgage rates, it does. but they did record that they continue to rule out the possibility of double-digit price declines for the entire country in 2023, due in part to improving mortgage rates.

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