For prospective homebuyers and current homeowners, keeping a close eye on mortgage rates is crucial in determining when to make a move in the housing market. After five consecutive weeks of increases, the 30-year, fixed-rate mortgage averaged 6.39% for the week ending April 20, up from 6.27% the week prior, according to Freddie Mac. However, experts hold out hope that interest rates may have already hit their peak in 2022. In this article, we'll explore the latest predictions for mortgage rates over the next 90 days and what it means for those looking to buy or refinance a home.
Mortgage Rates for Next 90 Days
Home loan rates are caught in a tug-of-war between high inflation and the Federal Reserve's actions to restrain inflation, which often indirectly pushes long-term mortgage rates higher. The Federal Reserve raised its federal fund's rate by 25 basis points to a new range between 4.75% and 5% in March. The Fed has signaled that “some additional policy firming may be appropriate” to bring inflation to its target rate of 2%. However, the experts believe this suggests that the Fed may be ready to pause or cut the benchmark rate when they meet again in May or resume more aggressive tightening measures.
The National Association of Realtors (NAR) senior economist and director of forecasting, Nadia Evangelou, predicted that if inflation continues to slow down, mortgage rates may stabilize below 6% in 2023. The Mortgage Bankers Association (MBA) expects that 30-year mortgage rates will end in 2023 at 5.2%.
On the other hand, Freddie Mac forecasts that the average 30-year mortgage will start at 6.6% in Q1 2023 and end at 6.2% in Q4 2023. Therefore, housing market stakeholders are keeping a watchful eye on the data-dependent Fed for signals on whether policymakers will maintain or cut the benchmark rate or resume more aggressive tightening measures.
What's the best strategy for prospective homebuyers in this uncertain economic climate? “Be prepared to jump on a dip in rates,” says Robert Frick, the corporate economist at Navy Federal Credit Union. “But only if you have a property in mind that fits your budget.”
According to Compass U.S. region president, Neda Navab, there have been signals that mortgage interest rates may be at or near their peak, given recent encouraging news around inflation and a corresponding drop in the U.S. Treasury yields that help set mortgage rates.
A sustained drop could push mortgage rates into the 5% range late in the second quarter or in the second half of 2023, but that's definitely not guaranteed. Mortgage rates are likely to move in the 6% to 7% range over the next few weeks, which continues to pose a significant challenge to affordability, according to Realtor.com economist, Jiayi Xu.
The fight over raising the debt ceiling is likely to drag into the summer, and mortgage borrowers should expect rate volatility as a result, warns Zillow Home Loans senior macroeconomist, Orphe Divounguy. This rate volatility could mean that prospective homebuyers should not wait for mortgage rates to decrease further, as they may start increasing again soon.
To sum up, it is anticipated that the mortgage rates in the upcoming 90 days will fluctuate, with marginal rises or drops contingent upon the Federal Reserve's efforts to curb inflation. Those intending to buy or refinance a home should remain alert for any favorable changes in the rates, provided they have a property in sight that meets their financial plan. Additionally, they should keep a close tab on the data-based actions of the Fed to gauge whether they will retain or diminish the benchmark rate or adopt more forceful measures to tighten the market.
Home loan rates are being influenced by high inflation and the Federal Reserve's actions to restrain it, leading to fluctuating rates. The best strategy for prospective homebuyers is to be prepared to jump on a dip in rates, but only if they have a property in mind that fits their budget. Experts predict that mortgage rates may stabilize below 6% in 2023, but Freddie Mac forecasts rates to end at 6.2%.
With the fight over raising the debt ceiling likely to drag into the summer, borrowers should expect rate volatility. Prospective homebuyers should remain vigilant for any favorable changes in the rates but shouldn't wait for rates to decrease further, as they may start increasing again soon.
A Few References:
- https://www.noradarealestate.com/blog/mortgage-interest-rates-forecast/
- https://www.noradarealestate.com/blog/mortgage-rate-predictions-next-week/
- https://www.forbes.com/advisor/mortgages/mortgage-interest-rates-forecast/
- https://www.hsh.com/2month4cast.html
