As we enter the New Year, new predictions for the housing market are emerging, especially when it comes to mortgage rates.
Thanks to the COVID-19 pandemic, the housing market has been seeing tremendous instability since early 2020.
Thanks to the lockdown, interest rates and mortgage rates plummeted. That makes it difficult to predict where things are going in the housing market going into 2023.
The housing market is influenced by a number of factors, including national and global factors, including economic conditions in other countries. While things are still a bit uncertain in the U.S. when it comes to the housing market and mortgage rates, experts have made some predictions for the housing market and mortgage rates in 2023.
One prediction for 2023 is that first-time Millennial home buyers will start searching for their first homes. After how difficult the housing market has been the last few years, Millennial buyers will likely be eager to enter the housing market.
So, what does that mean for mortgage rates?
An increase in demand for homes leads to an increase in home prices.
Mortgage rates have more than doubled since this time last year. However, the average interest on the 30-year-fixed-rate mortgage has dipped below the 7 percent threshold.
Some sources predict that mortgage rates will yo-yo, meaning they’re going to continue to fluctuate as they have been the last few years. Some say that January’s mortgage rate will be similar to what it was at the end of December.
McBride predicts that the average rate for a 30-year fixed mortgage in January will be between 6.4 percent and 6.6 percent and that the average 15-year fixed mortgage rate will be between 5.6 percent and 5.8 percent.
Inflation directly impacts mortgage rates, which means when mortgage rates rise, monthly payments for a loan increase.
If inflation rises too high, the Fed may increase the federal funds rate in order to reduce the money supply, thereby reducing inflation. But when the Fed authorizes that increase, it can cause mortgage rates to rise, which leads to a decrease in demand for home buying. Subsequently, housing prices begin to fall.
While its apparent mortgage rates could yo-yo as they’ve been doing the last few years, they could also decline even further. Housing economists predict that 30-year mortgage rates will drop to 5.25 percent by the end of 2023, according to Bankrate’s chief financial analyst, Greg McBride.
As mortgage rates fall even further, it’ll continue to be a seller’s market.
Current mortgage rates are:
Compared to this time last week, the mortgage rate increased for every type of mortgage.
These higher mortgage rates are making it hard for single-family housing development, according to Reuters, leaving the supply of homes at a standstill.
Since inflation is still a problem, experts are concerned about a recession in 2023. In the coming weeks, mortgage rates will start to fall as a result.
Experts expect a fall below 6 percent.
However, some experts believe that mortgage rates will rise in the new few months.
If you’re planning on buying a home soon, you might want to pay attention to where the market’s headed before you start the home-buying process.
Now that you have a general idea of where the housing market and mortgage rates are right now, you can make an informed decision about whether now is the right time to buy.
With expert predictions at the forefront of your decision, you’ll be better equipped to get a home you can afford at the right time.