The economy has a major influence on mortgage interest rates, and when it is in a recession, rates usually decrease. This is great news for potential homebuyers, as it will reduce their monthly homeownership costs. Nadia Evangelou, senior economist and director of Real Estate Research at the National Association of Realtors, anticipates mortgage rates to remain above 6 percent in February, but to gradually decline as the year progresses. Selma Hepp, deputy chief economist at CoreLogic, predicts that the 30-year fixed-rate reference mortgage will average between 6.0 and 6.25 percent for the 30-year mortgage and from 5.25 percent to 5.50 percent for the 15-year mortgage loan in February.
Bankrate's forecast suggests that the rate will fall to 5.25% by the end of 2021. Mortgage rates have a direct impact on your monthly payment, the total cost of the loan, and the amount of housing you can afford. Over the past year, persistent inflation, rising interest rates and economic uncertainty have taken hold of the tumultuous housing market. The culprits are inventory restrictions, which are expected to worsen as more buyers enter the market while sellers wait for rates to drop even lower. Some changes in mortgage rates are expected, as the Federal Reserve's harsh words about higher rates offset excessive optimism about falling inflation. Of course, these rate forecasts are subject to change, depending on fluctuating conditions and unforeseen factors that could cause borrowing costs to be more or less high or lower than expected. The 30-year fixed-rate reference mortgage averaged 6.13 percent at the time of writing, up 2.58 percent from a year ago, but down from its peak of 7.08 percent last fall.
This week, the average rate on a 30-year fixed-rate mortgage was 6.48%, according to data from Freddie Mac. Hepp believes that low mortgage rates close to 6% will mean that more families will be able to buy homes this year, but he adds that others, especially those buying a home for the first time, will continue to struggle. In conclusion, it is likely that real estate interest rates will go down in 2023 due to economic conditions and other factors. However, it is important to keep in mind that these forecasts are subject to change depending on fluctuating conditions.