Where are rates headed for 2023?

You have a better shot of predicting the weather than where interest rates will be — at least that seems to be the case in 2023. The industry overwhelmingly thought rates would tick down in the fourth quarter of 2023 giving homebuyers (and sellers) a little relief, but as we head into the fall, we are seeing revised predictions. Let’s see what’s driving this analysis.

As the economy ramped up coming out of COVID, so did inflation. In the simplest of terms, the Federal Reserve’s monetary policy is to drive up the cost of borrowing which drives down consumption and eases inflation. Once inflation is in an acceptable range, they ease off the rate hikes and will begin to lower borrowing rates.

As 2023 marched on, inflation started to move downward, especially in the Core Consumer Price Index (CPI) which takes out volatile food and energy prices, but has been stubborn in that non-core sector and thus has led to the Fed continuing to raise rates throughout the year culminating in 28-year highs in mortgage rates. And with employment and hourly earnings still very strong, it is leading the Fed to either maintain the status quo or introduce one more rate  hike for the remainder of 2023.

So what does this really mean for homebuyers or sellers? How can you take this information and put it in perspective for both?

By taking a genuine interest in the lives of our clients, by staying top of mind with them and by asking questions about who they are as a person and what’s, we will uncover those life events of your clients or their friends and family that could lead to buying a home — regardless of where rates are at. Our loan officers can provide a holistic review of their options to achieve their next home sale or purchase and illustrate a roadmap to what works best for them.

Working together to turn that warm list hot or your hot list to closed transactions is just one way we are here to help you achieve your goals. Reach out to a Key Mortgage loan officer today!