What To Expect From Mortgage Rates in 2023
In the last year, the housing market has increased costs exponentially. If you plan to buy a house soon, learn what to expect from mortgage rates in 2023.
A mortgage home loan is an agreement between a lending institution and a borrower. The borrower receives money to purchase a home, and the new homeowner must make regular payments until the home is paid off to the lender.
Paying back loans always involves an interest rate, which typically ranges from 3 to 7 percent. If you take a mortgage home loan, you will inevitably pay back more money than the initial loan due to interest rates.
However, interest rates vary each year depending on the current state of the market, which can potentially impact the home you’ll choose to purchase in the upcoming year.
If you’re considering buying a home in 2023, here is a quick rundown of what to expect from mortgage rates in the new year.
A Brief Rundown of 2022
The pandemic brought record-low interest rates and a surging housing market. But as inflation spiked throughout 2022, rising interest rates impacted the housing market.
In January 2022, the fixed mortgage rate for a 30-year payment period was about 2.5 percent. But by the end of this year, the average rate is around 6 percent.
Early 2023
There won’t be much of a change at the turn of the new year. Many people have recently purchased homes, and there’s not an abundance of people willing to sell. You might even see a small spike during the winter months if inflation continues to rise. Therefore, the average interest rate will probably stay around 6 percent.
Middle to End of 2023
Fortunately, the housing market will probably pick up again closer to spring and summer. This means we can expect mortgage rates in 2023 to gradually get lower as the year progresses.
Resolving the consequences of inflation takes time. For the housing market, this means you might see interest rates of about 4 percent toward the end of 2023. While this isn’t a drastic change from the previous year, it’s a step in the right direction, as it will create more opportunities for homebuyers.
Before applying for a mortgage, make sure you have a good understanding of your budget and the housing market. Then, when you’re ready to buy, learn about getting a credit union mortgage loan with us at GFA Federal Credit Union. Contact us today for more information!