Where will mortgage rates be in 2023?

Blog Post Image
Real Estate

A lot of people are talking about where mortgage rates will be in 2023. Here's what I know: the housing market is slowing down due to inflation and the sluggish economy. It’s still competitive, but not that much. You can definitely get a great deal on a home if you're willing to put in some effort.


But first, let's start with some basics: what is a mortgage rate? It's basically how much interest you pay on your loan every year. If you borrow $100 and pay back $100 plus 7% of that loan each year, then your rate is 7%. If you borrow $100 and pay back $100 plus 10% of that loan each year, then your rate is 10%. And so on.


The reason why this matters is because when interest rates go up or down, it changes the amount of money you'll owe at the end of the term—which means it changes how much money YOU have to pay back! So if interest rates go down from 2% to 1%, that means you'll owe less than if they stayed at 2%. And if interest rates go up from 2% to 3%, that means that you'll owe more than if they stayed at 2%.


But I've got some good news for you.


Fannie Mae predicts that mortgage rates will drop down to mid-4% in 2023. This is a great opportunity to get into the market now while rates are still low. You never know when they'll rise again! And we're not just talking about houses—we're talking about condos too! So if you want to buy, there's never been a better time to do it.


Currently, 30-year fixed mortgages are sitting at 7%. That's a scary number! But don't worry—you can still get a good deal on your mortgage if you act fast. Prices are generally down and offers can often be submitted below ask. Gone are the days of 20 competing offers; gone are housing markets with a shortage of inventory and people willing to waive their rights to due diligence, and gone are waiver requests for contingencies. This means that getting your financing lined up first is even more important than it was before! If you want to make sure that everything goes smoothly once you've found the perfect house, then don't wait until the last minute to get your financing in order!


Also remember that even if we knew exactly what would happen with interest rates over the next four years, there would still be other things affecting your home loan cost—like the economy, which might change how much people can afford to spend on houses or how willing they are to take out loans at all; or inflation rates, which affect how much your loan balance will go up over time due to rising prices on food and other essentials; or housing market trends like inventory levels or home prices themselves.


Right now, the US has a major housing shortage and building is nowhere close to bridging the gap. Besides, the mortgage rates have been historically low for the last decade or so—and even though they've been rising sharply over the last few months, we're still at historically low levels. This means that there's a lot of room for them to continue increasing.


But what does this mean for you? Well, if you're planning on buying a home in the next few years, now might be the time to lock in some good rates while they're still available! And if you're planning on refinancing your current mortgage, this is also a great time to do that as well—just make sure you do your homework and shop around before you commit yourself.


Remember, the longer you wait, the higher the risk that interest rates will rise again before you get approved for your loan—and then what? You'll end up paying more than expected at closing (or even losing out entirely) because you waited too long to get started.