There’s one thing homebuyers and home sellers dislike equally: unpredictability. Which makes the current state of interest rates welcome news for all. Let’s look at recent mortgage rates and where experts predict they’ll go.

Where Things Stand Now

According to Zillow, the average interest rate for 30-year fixed mortgages in America was around 6.5% at the start of July 2023. That makes average payments on 30-year home loans about $3,000 per month. This rate varies by borrower and loan type; a 30-year FHA loan, for example, had an average rate of 5.47% in early July.

Credit Score Affects Your Rate

According to Business Insider, borrowers with credit scores over 660 will see interest rates close to the national average. Nationally, people with FICO scores from 760 to 850 obtained an average rate of about 6.6% in July 2023.

What are financial forecasters saying?

Most economists expect today’s rates to remain steady in the coming months, reasoning surges like last year’s jump past 7% are unlikely. Greg McBride, an analyst at the financial services company Bankrate, says, “We’re [also] unlikely to see a material drop in mortgage rates.” Lisa Sturtevant, chief economist at the real estate agency Bright MLS, agrees, saying she expects rates to “be in the 6.5% range the rest of the summer.”

What about beyond summer? Freddie Mac’s chief economist Sam Khater tells Forbes, “[W]ith the rate of inflation decelerating, rates should gently decline over the course of 2023.” The National Association of Realtors predicts “mortgage rates will drop, with the 30-year fixed mortgage rate progressively falling to 6.0% this year and to 5.6% in 2024.”
That’s good news for would-be homebuyers. Erin Sykes, the chief economist for the real estate brokerage firm Nest Seekers International, says, “Small adjustments in rates should not affect your motivation to purchase a home.”

Some Historical Perspective

As the focus on mortgage rates usually concentrates on today’s landscape, it’s helpful to zoom out to see the wider context. According to data from Freddie Mac, the average 30-year fixed mortgage rate was 8.15% at the start of 2000. The rate topped a whopping 18% in 1981 and made a rare plunge below 3% in 2020. Historically speaking, today’s rates are fairly reasonable.

If you have questions about mortgage rates in your area or want to see if purchasing a new home fits your financial scenario, contact us online or call us at (972) 591-3097.