The Federal Reserve has been raising benchmark interest rates aggressively. That is leading to big interest rate increases for mortgage loans. Mortgage rates are also affected by broader economic conditions.
The housing market has seen an increase in demand, causing a lack of inventory. This means that supply of homes will continue to be constrained. However, there are signs of a slowing down in the growth of new construction.
Some housing experts expect that mortgage rates will rise in 2023. They argue that this is due to the Fed’s increased focus on inflation.
But others say that the economic outlook is still uncertain. They are hesitant to forecast mortgage rates because of the recent extreme fluctuations.
In the short term, though, they predict that interest rates will remain steady. However, they believe that they could move higher in the long run.
The Mortgage Bankers Association predicts that the average mortgage rate will be in the 4.8% to 5.5% range in the next year. It is within striking distance of Freddie Mac’s prediction.
Meanwhile, the National Association of Realtors predicts that the 30-year fixed rate will be in the 5% to 5.5% range in 2023. While it is expected that rates will be lower in the coming years, some analysts are still cautious.
According to Nadia Evangelou, director of forecasting for the National Association of Realtors, there is a possibility that the market will cool in 2022. She says that the housing market is unsustainable.
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