Historically speaking, what will happen with mortgage rates in 2023 is a little more complex than what will happen with mortgage rates in 2022. The Federal Reserve has raised rates several times over the past few years. The rate hikes have been designed to help encourage consumers to spend less. But in the end, the rate hikes have made it more difficult for average borrowers to refinance.
For starters, the average rate on a 30-year fixed mortgage is now 7.29%. That is higher than it has been in 20 years. Luckily, there are some ways the Fed can get the housing market out of its current downturn.
For instance, the Fed could relax its interest rate policies and bring mortgage rates down. But that isn’t likely to happen anytime soon.
On the other hand, the Fed could raise interest rates to record levels. That would bring down mortgage rates, but it also could cause a recession.
The good news is that mortgage rates in 2023 are expected to fall. In fact, the MBA is predicting that refinance volume will drop by 24% in 2023. That’s a big deal. In the past, the only time that mortgage rates have been lower than today was during the housing boom in the early 2000s.
The most important thing to note is that the Fed isn’t the only entity that can influence mortgage rates. Other factors like inflation and the war in Ukraine can also affect mortgage rates.