Rising mortgage rates have slowed the housing market over the last year, it’s true.
Over the past nine months, home sales have declined each month. Largely because the average 30-year fixed mortgage rate has doubled. This has limited homebuying power for many consumers. Recently, the average rate for financing a home briefly rose over 7% before coming back down into the high 6% range. But we’re starting to see a hint of what mortgage interest rates could look like next year.
While inflation continues to be high, we will continue to see higher mortgage rates. But! Don’t lose hope. There have been recent indications that inflation may be slowing. As the mortgage market eagerly awaits positive news on inflation, Ali Wolf, Chief Economist at Zonda, had these words to offer.
“The housing market is expected to face continued uncertainty heading into 2023 as consumers, financial markets, and policymakers work through their respective challenges in today’s economy. We are watching for any additional stability in the MBS market, signs of cooling inflation, and/or less aggressive Federal Reserve action to give us confidence that mortgage rates are past their peak.”
As the dust settles and inflation begins to come down, we can expect mortgage rates to follow. We’re seeing the first signs of this now. Mortgage rates will come down – it’s just a matter of time. Hopefully, inflation will continue to decline, bringing mortgage rates with it. This will give prospective homebuyers more buying power, leading to a stronger market in 2023.