As we start the new year, exciting news in the mortgage world is upon us – rates have dropped about a full percentage point over the past few months! True, mortgage rates did tick up from the historic lows we saw in the latter half of 2021, increasing over 2022. But, as we head into 2023, that upward trend is reversing and showing no signs that rates will increase over the coming year. Making now a good time to get a mortgage.
Predictions for the Year
So what do experts expect to happen to mortgage rates throughout 2023? Nadia Evangelou, an economist for the National Association of Realtors, says, “Two of the main factors affecting today’s mortgage market have turned more favorably recently when it comes to mortgage rates…Inflation continues to ease while the Federal Reserve has switched to smaller interest rate hikes. 2022’s higher federal funds rate has started to tame inflation. Thus, mortgage rates will likely stabilize below 6% across 2023.”
How DFW May Fare
But not everyone seems to be getting the message about falling interest rates – which is a good thing. Despite the rate drop, demand has remained sluggish. And that cooled-off demand often means lower home prices. In the Dallas-Fort Worth area, the median sale price has fallen about 9% since its high in June 2022. Jim Gaines, an economist at Texas A&M University, says, “There’s no doubt about it, the market is slowing down from a very high peak.” He adds that he believes that home prices in North Texas are likely to stay around where there are, or see a slight decline, in 2023.
According to Matthew Graham, the Chief Operating Officer for Mortgage News Daily, we can look to a strong bond market as a main driver of lower mortgage rates. He explains, “Mortgage rates are based primarily on the bond market (specifically, mortgage-backed securities or MBS). When MBS improve, lenders are creating loans that are worth more money and can thus offer them at lower rates…with MBS at their best levels in more than three months [thus] mortgage rates were quickly able to make the same claim.”
If you’re ready to take advantage of today’s attractive interest rates, an expert loan originator at the Decker Group at First United Bank Mortgage is waiting to hear from you. Connect with us online or give us a call at (972) 591-3097.