Insiders Predict What You Can Expect Mortgage Rates To Do Over The Next Year
Homebuyers struggled to afford a reasonable residence last year, which may still be the case in 2023. In the months coming up to the new year, the number of first-time buyers fell by 26%, reaching the lowest percentage in 41 years. Now, it seems the real estate market has been taken over by those who have the means to afford large down payments and high monthly bills; older, white, affluent Americans. "It's hitting younger people, it's hitting lower-income people. And we also find that this is hitting Hispanic and Black households especially hard," Austin Clemens, director of economic measurement policy at the Washington Center for Equitable Growth, told The New York Times.
In this aggressively competitive real estate market, consumers have faced properties priced well over their realistic values and tagged with high mortgage rates. In fact, rates reached 7.08% in October 2022, a 4% increase within 10 months (via The Mortgage Reports). After experiencing a tumultuous year, what can Americans expect in the upcoming months? Experts have weighed in on what they predict will be the average mortgage rates in 2023, as well as what to look forward to in 2024.
Contrasting expectations
Several experts and organizations have revealed mortgage rate percentages they believe we'll face in 2023 and 2024; some are more promising than others. For instance, The Mortgage Bankers Association predicts that the average 30-year fixed mortgage rate will be 5.2% in 2023 and that it will decrease to 4.4% in 2024 and 2025. Bank of America revealed similar calculations. "Mortgage rates likely peaked in 2022 and the historically wide 30-year mortgage rates and 10-year treasury yield spread between could narrow through 2023," Bank of America researchers wrote in January. "Our structured products team expects the 30-year mortgage rate to decline to roughly 5.25% in 2023, as spreads normalize with lower treasury volatility."
However, others aren't as optimistic, such as Moody's Analytics, which believes the average 30-year fixed mortgage rate for 2023 will be 6.5%. Goldman Sachs also predicts we'll see this rate at the end of the year. "The rapid decline in mortgage origination, especially refinances, has caused some lenders to exit or scale back lending," Goldman Sachs researchers wrote the end of January. "This has the potential to allow the remaining lenders to expand their margins by pushing mortgage rates higher" (via Fortune).