What Does The Future Hold For Mortgage Interest Rates?

The future of mortgage rates is a topic of great interest to many people. With rates currently on the rise, many are wondering how high they will go and when they will plateau.  As mortgage professionals, we at Integrity Mortgage feel this uncertainty and concern as much as anyone. In this article, we will examine some of the most recent predictions and how they could affect a decision to purchase a home in Maine.

Recent Trends

Recently, mortgage rates have been trending higher. In fact, in November, they briefly exceeded the highest levels seen in the 2008 financial crisis. The average 30-year fixed mortgage rate is currently at 6.32%. Some experts believe that it may continue to rise in the coming months. This rise in interest rates has caused many prospective homebuyers to delay their plans and has resulted in a decrease in demand for new homes.

While the upward trend in mortgage rates may be concerning, it's important to keep the bigger picture in mind. When compared to historical averages, the current rates are still relatively low. For instance, the average 30-year fixed mortgage rate was over 20% in the early 1980s. If rates do continue to increase, they will eventually reach a point where they will negatively impact affordability and place pressure on home prices.

Forecasts for Interest Rates

Let's take a look at some of the most recent predictions for interest rates. Just last summer, Freddie Mac predicted that mortgage rates would average around 5% in 2023, an almost hilariously over-enthusiastic prediction.  This should illustrate how unpredictable our current market is. There is also the possibility that rates may go higher if inflationary pressures continue to rise. On the other hand, the Mortgage Bankers Association predicted rates to level off, with an average 30-year fixed mortgage rate will be around 6% to 6.5% in 2023, which seems much closer to the mark.

Given the volatility of the market and the Federal Reserve’s aggressive anti-inflation measures, few experts are chiming up about their predictions now, but it’s widely agreed that interest rates will not fall below 5% for at least the next year. This means that while this certainly isn’t the best time for a mortgage, there probably won’t be a better opportunity in the near future.

When Will Mortgage Rates Plateau?

Now that we have looked at some of the most recent interest rate predictions let's focus on when mortgage rates are expected to plateau. The general consensus among experts is that rates will level off within the next 12 months, but there is a significant amount of uncertainty surrounding this forecast. If inflationary pressures continue to increase, rates may go higher than predicted, but if the economy slows down and there is less loan demand, rates may start to decrease.

Most housing market analysts agree that interest rates will remain tight for the next few years, meaning that they may fluctuate slightly but not make any major changes. Freddie Mac anticipates 30-year fixed Mortgage rates fluctuating between 6.2% and 6.6% for qualified borrowers in 2023.

There is a split among experts regarding the future of mortgage rates. While some believe that they will continue to rise, others predict that they will plateau. Brian Koss, executive vice president of Mortgage Network, believes that the peak for mortgage rates has already been reached and that as the economy continues to recover and more people get vaccinated, rates will start to decrease.

How High Will Interest Rates Go?

The answer to this question largely depends on the direction of the economy. If the economy continues to grow, interest rates will likely continue to increase. However, if the recovery slows down or stalls, rates may level off or decrease. It's not possible to predict with certainty how high interest rates will go in the coming years, but staying informed about the latest predictions can help make informed decisions about buying.

At Integrity Mortgage, LLC (NMLS #1692497), we understand the market and the integrity needed to help you survive economic downturns and thrive through them. Reach out to us today to learn how we can help you secure a home loan or refinance an existing mortgage.