Mortgage interest rates forecast 2023 | Mortgage Rates Forecast For 2022

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On September 27th, mortage interest rates surpassed 7% for the first time since 2002. This came just days after the Fed raised interest rates. This has been one of the most dramatic increases in mortgage rates in history, and it has had a big influence on the housing market.

Home prices in Orange County are beginning to tumble month over month, and homes are taking much longer to sell. To understand where the housing market is headed, it is crucial to know where interest rates are likely to go.

Current mortgage and refinance rates forecasts 2022 & 2023

We analyze mortgage rate forecasts or estimates  from Fannie Mae, the Mortgage Bankers Association, and Moody’s Analytics’ top economist, Mark Zandi.

Fannie Mae and the Mortgage Bankers Association predict that interest rates will be lower in 2023 than they are now. Mark Zandi believes that rates will remain near current levels during the Spring season.

Mortage interest Rate Forecast 2023

Fannie Mae’s Morrtage Interest rate forecat 2023

First, we’ll take a look at Fannie Mae’s most recent September market prediction, which predicts where mortgage rates will wind up in 2023. And, if you’ve followed my prior forecast on Fannie Mae, you’ll notice that they estimate mortgage rates will be substantially lower in 2023 than they are now. And, in their most recent September housing market projection, they actually increased their expectations for mortgage rates far higher than they did in their August forecast. As a result, we’ll look at where they believe mortgage rates will finish up.

2022 home sales projected to fall 17.2%

SourceFannie Mae Housing Forecast, September 2022

Also, take in mind that current mortgage rates are roughly 6.75%. So they estimate an average 30 year fixed rate in the fourth quarter of 2022. Mortgage of 5.7%, and looking ahead to 2023, they expect 5.7% in the first quarter. They anticipate 5.6% growth in the second quarter. They anticipate 5.6% growth in the third quarter and 5.5% growth in the fourth quarter. As you can see, they anticipate interest rates to be roughly 1% lower than they are now throughout 2023. Keep in mind that these figures were only revised upward from August, and they are all approximately 1% higher than what their August projection projected.Mortgage Bankers Association’s forecast 2023

And now we’ll take a look at the Mortgage Bankers Association’s forecast. They also changed their interest rate forecasts upward, though it was a lot smaller modification than Fannie Mae had done and so according to their forecast in the fourth quarter of 2020.

Mortgage refinancings trending down 72.6% this year

SourceFannie Mae Housing Forecast, September 2022

They anticipate that the 30-year fixed-rate mortgage will average 5.5%. Looking ahead to 2023, they anticipate 5.3% growth in the first quarter. They forecast 5.3% growth in the second quarter as well. They anticipate 5.1% growth in the third quarter and 5% growth in the fourth quarter. As you can see, the Mortgage Bankers Association anticipates slightly lower interest rates than Fannie Mae at this time.And now we’ll take a look at the

Mortgage Bankers Association’s forecast.

They also increased their interest rate forecasts upward, though it was a far smaller modification than Fannie Mae had done and so according to their forecast. Which would be fantastic news for the home market.

As you are aware, the market is quite sensitive to interest rates at the moment, and the higher interest rates that we are currently witnessing have a significant impact on how quickly the market is slowing. So both of these organisations anticipate that the 30-year fixed-rate mortgage will be 1 to 1 1/2% lower in 2023 than it is now, at around 6.75%.

And I thought it was important to highlight that I went back and followed up on some of their early this year estimates, and the interest rates they predicted ended up being lower than what we really saw in the market. So it’s absolutely feasible that their forecasts are now incorrect.

Mark Zandi Mortage Interest rate forecast 2023

So it’s absolutely feasible that their projections are still slightly low in comparison to what we’ll really witness. We’ll see. Mark Zandi, chief economist of Moody’s Analytics, believes we will see higher, more elevated interest rates until at least the first half of next year.

And in a recent series of tweets, he stated that he was originally expecting the 30 year fixed rate mortgage to average about 5.5% throughout the spring buying season, but now he thinks 6.5. Percent is much more likely, and as I quote is a darker outlook for home sales, home building, and house prices.

Mark Zandi continues by claiming that his prediction was incorrect since there was a huge difference between the 10-year Treasury and the 30-year fixed-rate mortgage. And going back to 2017, the average spread between the 10-year Treasury and the 30-year fixed-rate mortgage was 2.05%, according to a recent Inman piece I read. What that ultimately means is the average interest rate for a 30-year fixed rate. Mortgage interest rates are around 2% higher than those on a 10-year Treasury note.

The fact that many of these predictions have been, you know, lower than what 30-year fixed-rate mortgages actually turn out to be could thus be explained by this.Because the 30 year fixed rate mortgage will be roughly 1% higher than what the prediction and the Inman were expecting if they are basing their forecasts on a 2% spread and the spread actually ends up being 3%.

The article continues by stating that an increased risk of early mortgage repayment is one factor in why this spread has expanded. They also mention the possibility of a decrease in interest rates in the event of a recession. Additionally, the likelihood of a recession has increased to 59.5%, according to Moody’s Analytics. Consequently, you are familiar of the people involved in the 30 year fixed rate mortgage loans.


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