2023 Interest rate forecast
From the desk of Melissa Cohn* at William Raveis Mortgage in January 2023:
2023 will be an interesting year for mortgages and the real estate market. Predictions for the year are all over the board with some expecting mortgage rates to climb to near 9%—which would create a drag on the real estate market. Others (including myself) believe that rates will fall back into the 5%’s in 2023, especially in the second half of the year when we will likely find the US economy in a recession.
We do know that the Fed has pledged to raise rates as it continues to battle inflation with .25% hikes expected at the February and March meetings, and perhaps again in May if the data still points to stubborn inflation. However, mortgage rates will not be driven by the Fed in 2023. Rates will be driven by economic data. Signs of easing inflation and a weakening economy will drive mortgage rates down in response to lower bond yields. The seven rate hikes in 2022 appear to be working their way into the economy slowly but surely.
Bond yields have started 2023 with a strong rally as we see already see signs of weakening and mortgage rates are already lower than where they ended last year! Banks are all gearing up for what is expected to be a slow year for originations and they will sharpen their pencils in order to bring mortgages in the door. All good news for today’s buyers and borrowers!
I say that my champagne glass is half full!
*Melissa Cohn is a seasoned expert with more than 30 years’ experience in the mortgage industry. She’s based in NYC and is currently the regional vice president at William Raveis Mortgage. Feel free to reach out to her at 917-838-7300 or at Melissa.Cohn@Raveis.com