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How high will mortgage rates climb? Weigh in on the experts

When rates might start to come down depends on what the Fed does over the next few months.

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Mortgage rates have been high for some time, and they are currently the highest they have been this year. Until July 10, 2023, Average mortgage rates 6.40% for a 15-year mortgage and 6.95% for a 30-year mortgage, respectively Bankrate.

Mortgage rates are expected to remain steady The Fed’s latest rate cutBut according to data from Freddie Mac, they are actually up slightly – about 0.30% – from where they were when the Fed made the announcement on June 14. And with the Fed expected to raise rates again at its July 25-26 meeting, mortgage rates could rise further.

But how high will it be and how long will rates rise? We asked some experts for their thoughts.

See the most up-to-date mortgage rates here.

How high will mortgage rates go?

Here are the experts we spoke to predicting mortgage rates in the immediate future and over the next few months.

Rates may reach their peak

The bad news is that mortgage rates are likely to remain high for some time yet.

“With the Fed expected to raise the federal funds rate at least twice this year, I believe we’ll see us touch last October’s high of 7.2% or briefly before dropping below 6% later this year,” said Peter Idziak. , Polanski is a senior associate at Beatle Green, specializing in mortgage law

The good news is that rates are unlikely to be astronomically high.

“With mortgage rates around 7%, I think they’ll be near the top and below 8%,” said Noah Damsky, CFA and principal at Marina Wealth Advisors. “The Fed is likely entering the next phase of its interest rate hiking cycle as inflation continues to slow. As inflation continues to cool and the economy continues to deteriorate, I expect the Fed to cut rates in 2024, which will keep mortgage rates from going too high.”

That’s consistent with observations by Sam Sharp, executive vice president of national sales at Guaranteed Rate.

“We saw the peak of rate hikes in October,” Sharpe said. “We’ve noticed a general trend that rates stall in the housing market once they break the 7% barrier. While I believe we’ll still see higher rates this year, I think we’ve tested and recognized the ceiling.”

Check today’s current mortgage rates online now.

Where rates are heading

When rates might start to come down depends largely on what the Fed does over the next few months and how the market reacts. That said, many experts expect rates to start falling by the end of the year or early next year.

“I think we’ve reached the peak of high interest rates and hopefully start to see some relief in the second half of 2023,” said Darren Tully, senior loan officer at Cornerstone Financial Services. “Currently, rates are higher than what the Mortgage Bankers Association and Fannie Mae had forecast for the second and third quarters of this year, and this has been fueled by recent banking turmoil, Fed rate hikes, labor data and higher-than-expected inflation numbers.”

“As early as this Wednesday, July 12, when we get the Consumer Price Index, a good reading could push the inflation number back above 3% after it was above 9% at one point,” Tooley continued. “Given that some stubborn numbers still hold low inflation, hopefully, a better reading will be the catalyst for better rates later in the year.”

Alvin Carlos, CFP, CFA, financial planner and managing partner at District Capital Management, pointed to mortgage spreads as another indication rates may decline over the rest of 2023 and 2024.

“The spread between the 30-year mortgage rate and the 10-year Treasury yield is typically between 1.5 and 2%,” says Carlos. “The 10-year Treasury is now 4%, so mortgage rates should be between 5.5% and 6%. The 30-year mortgage rate is currently…well above the normal spread. So there’s a good chance mortgage rates will drop in the next six to 12 months.” One time. If the Federal Reserve signals a pause in rate hikes, that could be the spark that pushes mortgage rates back down.”

Start exploring your mortgage options by comparing current rates here

Bottom line

As with any economic prediction, nothing is 100% certain, and it remains to be seen where mortgage rates will actually go.

“If inflation picks up in the second half of 2023, it could force the Fed to raise rates higher than expected, which would push mortgage rates higher than current predictions,” Idziak said.

That said, based on the insights provided by these experts, we can reasonably expect rates to hold steady at 7% or above for the next few months before starting to trend lower.

Already, there is There are several things buyers can do To mitigate the impact of higher rates with larger down payments and careful comparison of different loan options. At the end of the day, mortgage rates may be out of your control, but you can still get by Best rates available today Do your research and weigh the various offers.

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