Will Mortgage Rates Go Down in 2023?

Brought to you by Warren Bradley Partners


After watching rates climb steadily throughout 2022, many people contemplating a real estate transaction want to know, will mortgage rates go down in 2023. While rates are double what they were this time last year, the last two months of slow declines in rates offer hope for what the rates will do in 2023.

Economists predict that mortgage rates will level off throughout the first few months of 2023, so long as the economy doesn’t suddenly downturn. Others believe that there could be a few more modest rate increases in Q1 2023 with leveling off happening after that.

As of January 6, the national average 30-year fixed-rate mortgage was 6.52 percent. And while there have been a few up-and-down bumps since November 2022, the trend is down from its height at 7.24 percent for the week ending November 11.

2023 Mortgage Rate Predictions

So with a steady mortgage rate decrease over the past eight weeks, many are wondering if the rates are going to keep coming down or finally stabilize. To better understand why predictions show stabilization, you have to understand what influences and governs mortgage rates.

The rate hikes have been the Federal Reserve’s tactic for restraining inflation, which was at record highs with a total of 7 percent in 2021 and 7.1 in 2022. When the Federal Reserve takes these actions, it indirectly impacts mortgage rates.

The Federal Reserve increased interest rates seven times in 2022. Inflation rates remained at 7 percent in November 2022, and the Federal Reserve said it is considering a few smaller rate increases in early 2023 should the trend continue.

Mortgage rates are impacted by the bond market, and the bond market reacts to the actions the Federal Reserve makes. Ultimately, the Federal Reserve will keep making changes until inflation reaches 2 percent, which is more manageable and expected.

All that means is that the mortgage rates are still somewhat volatile as everyone waits for inflation to level off and watches for what the Federal Reserve will do to nudge inflation in the right direction.

Is 2023 a Good Time to Buy or Sell a Home?

We’re coming out of what was likely the best time to buy or sell a home or refinance your mortgage. Throughout 2020 and 2021, mortgage rates hit incredibly low rates of 2.68 percent.

Those low rates have changed perceptions of mortgage rates somewhat. So while rates in the 5-7 percent range seem high compared to 2020 and 2021 rates, they are still decent interest rates overall and the steady increase throughout 2022 made some buyers leery of taking on a new mortgage.

But with rate stabilization on the horizon, 2023 could shape up to be a good year to buy or sell a home or perhaps refinance a mortgage that you took on in 2022 when rates were at their peak.

The best way to know whether now is the best time for a real estate transaction is to talk to an expert. Warren Bradley Partners is an expert in middle Tennessee real estate. With a rich history dating back to 1972, these agents know each neighborhood in-depth to provide high-quality service and expertise.

Warren Bradley Partners uses Shelter Mortgage as its preferred lender to help home buyers fund their dream homes. If you’re unsure about what’s happening with mortgage rates, it’s best to get in touch with a lender familiar with your area to learn their insights as to the best financial decision you can make at that time and to compare various mortgage options to get the best rate and terms possible.