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What's New In Mortgage Rates in 2023?

What's New In Mortgage Rates in 2023?

Every year there are factors that will drive mortgage rates to rise or fall. These include the economy, the housing market, the Federal Reserve and its impact on banking rates, among other things.

Mortgage rates will drop or be moderate in January 2023

After the Federal Reserve hikes in 2022, this drove mortgage rates up to relative highs late last year. As inflation has cooled, the Federal Reserve has slowed its rate hikes and so they may moderate further actions in early 2023. As observed, we are seeing inflation settling down, and we would hope that mortgage rates will continue their recent downward trend.

Housing demand will rise in 2023

As you would expect, housing demand is inversely proportional to mortgage rates. Low mortgage rates typically foster high demand, while high rates tend to cool demand. With mortgage rates now trickling down, housing demand is returning, so starting your home search now can help you avoid competition in the normally active spring market, which may be accelerated by first-time homebuyers. 

Supporting the forecast of a downward trend, The National Association of Realtors and the Mortgage Bankers Association, and other economists are bullish on mortgage rates falling below rates at the end of 2022. 

Mortgage Predictions for 2023

The economy is currently swinging between high inflation and the Federal Reserve’s actions to attempt to restrain inflation. At the February 2023 meeting, the Federal Reserve made a statement that they anticipate rates to increase until they reach their target range. According to the Consumer Price Index (CPI) report, inflation rose to 6.5% for 12 months ending in December 2022. 

Rates could hit their peak this month, and then they could go down in the second quarter of the year, but it’s still too early to tell. Inflation continues to slow and could mean that mortgage rates could drop below 6% at the end of the year according to the National Association of Realtors (NAR) senior economist and director of forecasting, Nadia Evangelou. Freddie Mac is forecasting that an average 30-year fixed-rate mortgage will start at 6.6% in Q1 and end at 6.2% in Q4. 

One final note: as discussed, we’re still in a period of volatile mortgage rates, so be sure to shop around for a competitive rate. It’s important to get quotes from multiple lenders, so you can know that you are comfortable with the lender you choose and what they offer you.

It’s early in the year, and the housing market looks to be on a rebound. If you need a real estate agent to assist you in your selling or buying journey in Howard County, MD contact VSells and Associates.

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Whether you are buying or selling, we at VSells & Associates make it our mission to guide our clients through the whole process. We make moving simple, straightforward, and as stress-free as possible.

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