Interest rates have been changing a lot in the last few years and they did plateau a bit in the beginning of May before starting to rise again.

However, economists are mixed: are interest rates going to keep going up as they have been in the first half of 2023? Or are they going to slow and drop down close to 5% by the end of the year?

Mortgage Interest Rates in 2023

So far, since about March of 2023, mortgage interest rates have been slowly but surely rising.

In the month of May alone, interest rates have jumped from around 6.9% at the beginning of the month to 7.17% as of the 23rd of May, according to Forbes.

With inflation on the rise, the Federal Reserve has been hiking rates to attempt to contain inflation and keep prices from skyrocketing throughout the United States.

This rising rate causes other rates to rise as well, including mortgage interest rates. Over the first half of the year, rates have been rising, but in recent days, they have started to level off. Now the question is: will this trend continue and lead to a lower interest rate as 2023 draws to a close?

Are Mortgage Rates Dropping into the 5% Range?

According to Forbes, experts are mixed.

Some assume that mortgage interest rates will drop between 5% and 6% toward the end of 2023.

However, some predict that interest rates may continue to increase.

Currently, the average mortgage interest rate for a 30-year fixed mortgage is 7.17%, though a week ago it was down at 7.4%. That’s a pretty significant jump for a mere week. However, after a high in March, rates have dropped and remained fairly consistent through April.

As rates have increased so have costs to lenders and buyers who are taking a loan to purchase a home. Many potential buyers are concerned that rates will continue to rise and cause significantly higher costs during a home purchase.

However, there is some good news on the horizon. In recent weeks, the Federal Reserve has indicated that it may halt its tactic of increasing interest rates as inflation finally begins to slow down.

What 2023 Interest Rates Mean for You

As a potential buyer or seller, you’re probably wondering what all this means for you.

With higher costs to the buyer, some buyers are choosing to move further away from cities and into more affordable metros. Others are choosing to forego some contingencies—such as getting a home inspection—during the home purchase process.

Unfortunately, it’s really not a good idea to forego these contingencies. If you spend less now, you’ll more likely have to spend more later when unknown issues that you would have found in an inspection pop up in your home.

So, what should you do if you’re concerned about the price you’ll have to pay on your new home? Well, there are a few considerations to take into account.

How Long You’ll Have the Home

If you’re seeking your forever home, now is not the worst time to buy.

You should be able to refinance if and when interest rates drop in the future, but by buying now you’ll at least be able to settle down and start paying on that dream home.

In addition, it’s important to realize that inventory is still pretty low overall. Most homes are selling, maybe not as quickly as they were last year, but still with regularity. You should have no trouble finding a home that you can afford if you are patient and persistent.

What the Market Is Like

If mortgage interest rates do start to drop, there are going to be a lot more buyers headed into the market.

However, with the low inventory we have right now, these lower rates are likely to push us into a hot seller’s market that will leave buyers scrambling to get a home.

Many homeowners are not eager to sell, afraid they won’t be able to find a suitable home to replace their current residence. Most also have a low interest rate on their current mortgage that they are loath to give up unless it becomes absolutely necessary.

Therefore, if you’re seeking a home right now, you’ll find that while the inventory isn’t huge, there are some sellers who are pretty eager to sell. Waiting for a drop in interest rates could leave you with way more competition in a still slow market.

How To Buy a Home in 2023

If you’re ready to buy a home, don’t wait.

Lower interest rates will mean a significant increase in buyer traffic, which, coupled with the current low inventory, could leave you in desperate bidding wars and even force you to pay over the asking price just to get a home.

Here’s a helpful mantra to remember as you consider shopping for your next home:

You are married to the home, but you’ll be dating the mortgage rate.

If and when rates do eventually drop, it’s simple to refinance while still keeping the home you love.

Steps To Buying a Home

Now that you have a good idea of what potentially lowering interest rates mean for you, you may be thinking it’s time to get started seeking your new home.

Here are a few steps to take:

1. Save your money and consider your financial situation. Do you have enough for the estimated monthly payments you’ll need to make, as well as for the initial closing costs and down payment?
2. Check your credit score. A low score can help you get better terms with whatever loan you end up with. Request credit reports, pay off debts and balances, and hold off on getting new cards or loans until after you get a home.
3. Talk with multiple lenders. Don’t settle for the first offer! Shop around until you have a good idea which lender will give you the best terms.
4. Don’t forget the Annual Percentage Rate (APR). The APR is the total percentage rate price you have to pay over the course of the year for taking a loan. If you forget about the APR, you’ll likely end up paying more than you had thought. Make sure you know the APR before settling on a loan.

If you follow these steps, you should have no trouble finding a decent loan for your 2023 home purchase.

And with that house in your possession, don’t worry about the mortgage interest rates decreasing—as soon as they go down, you can get refinanced too!

If you have any questions about buying a home, specifically in the Tri-Valley area, don’t hesitate to reach out to me! I can help you figure out what mortgage interest rate and loan work best for your needs and get you into the home of your dreams!

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Hello…I work with both buyers and sellers in the  Northern California area.

My real estate spans from the East Bay (Tri-Valley) to the Greater Sacramento areas.

If you would like to know more about the Tri-Valley area, please read: “Everything you need to know about the Tri-Valley area”

• Pleasanton
• Livermore
• Dublin
• San Ramon
• Danville
• Alamo

Thinking about purchasing or selling a home? If so, please reach out to me by text, If it is convenient, I can schedule a Zoom chat so we can discuss your home goals. Wishing you all the best on your home journey. Cheers!

Warren

eXp Realty contact Warren

(925) 980-4603

DRE # 01861944

ALL MATERIAL PRESENTED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. THE INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED THROUGH SOURCES DEEMED RELIABLE BUT CANNOT BE GUARANTEED AS TO ITS ACCURACY. SUBJECT MATERIAL MAY HAVE ERRORS, OMISSIONS, CHANGES OR WITHDRAWAL WITHOUT NOTICE. ANY INFORMATION OF SPECIAL INTEREST SHOULD BE OBTAINED