As we move into the summer of 2023, many homeowners and prospective homebuyers are curious about what the future holds for mortgage interest rates. While there are many factors that can impact interest rates, including inflation, global events, and government policies, there are some general trends that can provide insights into what we might expect in the coming months.
The current state of mortgage interest rates is a balancing act between high inflation and the Federal Reserve’s efforts to control inflation. The Federal Reserve hiked rates seven times in 2022 and is continuing that trend into 2023, with rate hikes of 25 basis points at both the February 1st and March 22nd meetings—which totals nine straight rate hikes. They also stated that “some additional policy firming may be appropriate” to bring inflation to its target rate of 2%. However, inflation fell to 5% in March from 6% in the previous month, and this has led experts to believe that the Fed may pause tightening or even cut the benchmark rate.
There have been recent signals that mortgage interest rates may be at or near their peak, and a sustained drop could push mortgage rates into the 5% range by late Q2 or the second half of 2023. Additionally, the Mortgage Bankers Association predicts that 30-year mortgage rates will end in 2023 at 5.2%, while the National Association of Realtors expects mortgage rates to stabilize below 6% in 2023 if inflation continues to slow down. That said, looming political battles over the debt ceiling could impact rates and broader housing market conditions in the coming months. Low housing inventory remains a key factor in where rates go over the long term, with Daryl Fairweather, chief economist at Redfin, stating that when rates come down, it could lead to another hot housing market with more buyers than sellers, driving up prices due to the unsolved problem of low inventory.
In a market that is constantly evolving, predicting the exact direction of rates can be tricky. However, industry experts agree that partnering with a seasoned team is crucial to success.
April was expected to be the talking points month about the Fed Reserve not doing enough. Will they take control and beat back inflation? I see it as the dark before the dawn. May 10th will be the start of more positive rates. Predictions are that we may see 5.8% by summer!
Win Your Home Now, Win Your Rate Later
10 reasons to buy today:
- Sales price is permanent and lower today.
- Interest rates are not ideal and temporary.
- You can always go back and refinance when rates are lower.
- You can never change your purchase price.
- Sellers will accept less than list price.
- Sellers will accept offers with contingencies: inspection, financing, etc.
- Sellers will contribute funds towards your closing costs, and temporary rate buy-downs to give you lower rates today with the option of refinancing later.
- Less competition with current rates.
- Less inventory with unmotivated sellers with locked-in low rates (this will continue).
- Yes, inventory will increase when rates drop. Lower rates = more buyers = supply and demand = higher prices!