Last Updated on October 26th, 2022. Original: October 26th, 2022
In 2022 with mortgage rates almost double from last year and the recession, the likely outcome of the Federal Reserve’s battle against inflation, the question now is what will happen to mortgage rates in 2023?
While there is no perfect answer, looking at the forecast of expert trade organizations and economists can at least give us an outlook supported by the most current and detailed data available. At the Mortgage Bankers Association’s (MBA) 2022 Annual Convention & Expo held Oct 23rd-26th in Nashville, TN, their organization’s 2023 outlook was presented.
According to the Mortgage Bankers Association, their forecast is for mortgage rates to come down to 5.40% at the end of 2023.
According to Mike Fratantoni, senior vice president and chief economist for Research and Industry at the MBA, “we’re forecasting a recession for next year.” He further comments that a likely recession together with the Federal Reserve’s actions to reduce inflation and ongoing affordability issues, will slow down home purchases in 2023.
Joel Kan, VP and Deputy Chief Economist at MBA, states “The slowdown in housing activity and higher mortgage rates will quickly cut the rate of home-price growth. MBA expects national home prices will be roughly flat in 2023 and 2024, allowing household incomes some much-needed time to catch up to elevated property values. However, many local markets will see home-price declines, even if national price measures remain largely unchanged.”
The MBA economists see next year as a global challenge in which unemployment will rise, markets and rates will be volatile, and housing demand will soften. The upside will be that as the economy slows, mortgage rates should begin to fall from their current levels.
If you are wondering how these market conditions would affect your future home purchase goals, just submit a question, call, text, or email A+ Home Loans.