Mortgage Interest Rate Predictions for 2022 & 2023 | Why I believe interest rates might fall in 2023

Mortgage Interest Rate Predictions for 2022 & 2023 | Why I believe interest rates might fall in 2023

Mortgage interest rates have shot skywards like a rocket ship since early 2022, practically scaring just about everyone out of the real estate market!

The annual rate of inflation has been fingered by the fed as the reason for this sharp increase in rates,??But just as guilty is the plans to massively reduce the fed's balance sheet and dial back their purchases of mortgage-backed securities.

All these actions together have driven mortgage rates sharply higher.

Today I share my mortgage interest rates forecast for 2022 and 2023 (at least the balance of 2022.

This forecast is based on the currently advertised fed focus to keep increasing interest rates until the inflation rate falls below 2%.

While one can certainly make the argument that the fed is focused on the wrong calculation for their strategy, a chart of the YOY inflation changes shows that - at least for the last 4 data points - the rate of increase has flattened.

So if we take this flattening and assume the rate stays flat then the fed should reach their target in the April/June time frame of 2023.

What the fed does next is open to discussion and a lot of changes can happen between then and now including:

The risk of a recession - which the current negative yield curve is predicting (see my video on the yield curve on this channel).

The inflation rate might increase further which has the effect of pushing out to a later date any margin to reduce rates.

So what to do about all this?

Remember that during any home purchase activity you want to "date the rate, but marry the price", and the fact that the fourth quarter is usually best for buyers.

Your best strategy is to start looking for homes early and get prequalified so that when prices do take off again you will be in front of the pack to get into the home you want at prices lower than a year earlier.

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