Will mortgage rates fall in 2023? Here’s what home buyers should know

A compound interest rate over one year, a Rocky housing market And House prices have increased It has made buying a home more expensive for Americans today.

Coming out of historic lows, Mortgage rates today Around 6% to 7% APR. but Inflation With signs of cooling off and the Fed slowing rate hikes, many potential homebuyers may be optimistic about where rates may go in the next few months.

It’s unlikely that we’ll get the pandemic-era rate below 3%, but we can Mortgage rates go down Does the rate environment evolve by 2023? Not sure if you qualify for rates? Find the most competitive mortgage rates you can qualify for right here.

Could mortgage rates fall in 2023?

Despite the interest rate break in June, Rate hikes are expected Again after the Fed’s July meeting. Even with another rate hike on the horizon, the Fed has indicated it may be ready to ease rate hikes as inflation cools.

“My educated guess is that mortgage rates are near their peak as the Fed nears the end of its rate hike cycle and inflation has slowed significantly since 2022,” said Jack Northrup, CFP, founder of Experience Your Wealth.

However, that doesn’t mean mortgage rates will drop anytime soon. The Fed will likely keep rates high for a while before officials are ready to start cutting rates. Then, eventually, “when the Fed finally starts lowering interest rates, you would expect to see mortgage rates decline,” Northrup said.

The good news? Chances are good that the mortgage rate Will not increase much This year, even if they don’t actually start declining until late 2023 or 2024.

“I think rates are likely to be relatively flat through the rest of 2023,” said Al Faber, CFP, senior wealth manager at Woodson Wealth Management.

Faber cited not only the Fed’s rate decisions, but also other economic factors that influence rates. “It looks like we’re nearing the end of the Fed’s rate hike cycle,” he said. “As student loan repayments begin to have a reduced impact on consumer demand, we may see markets temper fears of a recession, which should also help soften mortgage rates.”

Despite the high rates, there are good options for home buyers today. Start comparing rates you may qualify for right here!

What you need to know if you’re buying a home today

Despite the current high interest rate environment, many experts we spoke to agree: you Don’t wait for mortgage rates to drop If you are in the market for a home now. It’s impossible to predict when or by how much rates might be lowered, and waiting could mean missing out on your dream home. Plus, you can start Building equity good luck But there are ways you can improve the application process and your chances of qualifying for the best rate possible.

“Before applying for a mortgage, I recommend making sure you have an adequate down payment and that your credit score is in the best shape possible,” says Northrup.

You can check your credit report for free through each of the three major credit bureaus. Look for any errors in the report and take quick action to get started Improve your score If you need.

Also make sure you plan the application against your other financial goals and obligations. “Don’t make large money movements or purchases before or during the approval process,” says Faber.

Because applying for other loans or lines of credit can temporarily lower your credit score. When you’re financing a mortgage worth several thousand dollars, even minute changes in your rate can make a big difference in what you pay over time.

Finally, make sure you shop around for the best rate you can qualify for.

“Get multiple quotes from multiple lenders before moving forward with one,” says Bill Nelson, CFP, founder of Pacesetter Planning. “If you get multiple quotes at the same time, it won’t count as multiple checks against your credit. A home is the biggest thing most people will buy; if there’s ever a time to price shop, it’s when you’re getting a mortgage.”

You can compare qualified mortgage rates for today here.

Bottom line

The tide of interest rates may be changing, but you still may Wait a little longer See mortgage interest rates go down by a significant amount. But with no guarantee mortgage rates will see a bigger drop this year or in the future, you may be better off taking action now. Focus on factors within your control. If you’re in the market for a new home, make sure you take steps to improve your credit and research your options so you can score. Best possible rate Save on your mortgage and long term.

Start your search here and see what mortgage rates you can qualify for now.