Home shoppers are being tested this year due to record-high home prices, rising inflation, and high mortgage rates. Many homebuyers looking for an affordable mortgage have been left in more uncertainty going into 2023.
First-time homebuyers are particularly affected by skyrocketing mortgage rates and home prices. This has resulted in a decrease in their buying power and down payment.
If you want to secure the best mortgage, even though the housing market is slowly improving, you should be keeping an eye on the market and any economic moves by the government.
The Federal Reserve aggressively increased its benchmark federal funds rates in an effort to reduce rising inflation. This was done throughout 2022. Although rate hikes by the Fed do not directly affect mortgage rates, they have an impact on the bond market which in turn has an impact on mortgage rates.
The Federal Reserve will not stop raising the fed funds rate aggressively until it believes runaway inflation is under control. This will drive mortgage rates higher.
Economic consensus seems to be that the economy will see strong signs that inflation is slowing down in the first half of next year. All indicators point to more upward pressure on mortgage rates in the future than a decrease in 2023.
Many shoppers have stopped buying in the market because of record mortgage rates and the uncertainty surrounding the housing market.
Will 2023 be a better time to get a mortgage?
Many housing experts believe that we will see a greater decrease in home prices month-over-month next year.
Now, we expect home prices to decline year-over-year in 2023. The national median single-family home value is expected to drop 5.5% over the course of the year.
However, the supply shortfall and strong underlying demand will eventually limit home price appreciation.
The home depreciation rate will not be the same in all markets. There will be regional variations. Markets that were once popular with buyers will see extreme swings to their disadvantage compared to those in less-populated areas.
Remember that home appreciation has risen in an abnormally high rate over the past few years. Comparing to the second quarter 2020, the average home sale price rose 45% to $542,000.
Some experts predict that the best case scenario for a 30-year fixed mortgage rate will be around 5.5% by 2023. Other experts expect rates to remain in the 6.5% to 7.5% range throughout the year. Freddie Mac recently forecasted 6.4%.
Original Blog: https://www.forbes.com/advisor/mortgages/how-to-get-best-mortgage-in-2023/?&utm_source=ra&utm_medium=referral
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