Skip to main content

Mortgage rates expected to stay high through 2023: Study says

This study tells us why mortgage rates may remain high this year

Mortgage rates rose in 2022, frustrating many homeowners who continued to press forward with their life goals despite an overwhelmingly unpredictable market. Still, whether you own a home, intend to buy this year, or plan to sell, 2023 may offer some much-needed stability.

Though many people expected mortgage rates to decline in 2023, Realtor.com shares its forecast, which it says will likely “disappoint” but “won’t [give you] whiplash either.” Here’s what you need to know.

Related Videos
Small home on mortgage papers beside house keys

What can we expect from the housing market in 2023?

In Realtor.com’s 2023 trend forecast, it shared a mix of hopeful and disappointing predictions.

Rental prices are expected to rise throughout the year, but “the increases will be much more modest than the huge surges seen earlier this year,” said Realtor.com. Additionally, Realtor.com stated, “The inventory of properties is expected to spike by 22.8%.” However, this will not be due to more sellers putting their homes on the market, but rather because properties may sit longer and slowly accrue throughout the year.

As for home prices, Realtor.com “predicts they’ll rise 5.4% year over year in 2023” nationally. While this comes as good news to many first-time buyers, we can rest assured that we won’t see double-digit increases as we saw during the pandemic.

“Median monthly mortgage payments are expected to be about 28% larger than this year and twice as large as they were in 2021,” said Realtor.com. This is due to home prices remaining high as many sellers try to get the best deal for their property. Additionally, fewer properties have been listed since homeowners locked into lower mortgage rates have decided to wait out these fluctuations and higher rates going into 2023.

Real estate agent handing key to a buyer

For homeowners, mortgage rates may stay high

Unfortunately, mortgage rates are expected to remain high. Realtor.com predicts “that mortgage rates will average 7.4% in 2023, trickling down to 7.1% by year’s end.” While mortgage rates may decline slightly, it’s unlikely they will dip below 7%. Due to inflation and raised rates from the Federal Reserve, mortgage rates will remain high.

We’re unlikely to see COVID-era mortgage rates, which were about 2.5% for a while. And when compared to the 2021 average of 3%, mortgage rates in 2023 have more than doubled.

Realtor.com said, “Renters are already stretched thin, contending with higher and rising rents along with inflation, making it difficult to save up for a down payment on a home of their own.” With higher mortgage rates, an “anemic” housing market with few properties to choose from and high rent prices, first-time buyers may sit back and wait for their dream home.

Furthermore, Realtor.com “expects the usually busy spring season will be quieter than normal in 2023, as buyers struggle against the higher prices and mortgage rates.” So, as spring is here in the northern hemisphere, we might expect to see fewer homes being bought or sold.

Still, it’s important to point out that mortgage rate studies differ on the actual percentage rate being represented. Additionally, Realtor.com said that while it doesn’t “expect the nation will succumb to a major recession, economists aren’t ruling it out entirely.” A recession would change many of the values and predictions represented in this study.

For many homebuyers, sellers, renters, and those sitting on their current mortgage rate, 2023 is expected to be a year of stabilization. Though unfortunately, that doesn’t guarantee lower rates or lower home prices.

Editors' Recommendations

Avoid surprise repairs: 77% of new homeowners face these unexpected costs
surprise home repair costs shutterstock 1800995521

Homeownership and interest in buying homes are steadily on the rise. With so many new homeowners flooding the market, hippo.com conducted a survey to see how new buyers were feeling after their big purchase. The survey found that the overwhelming majority of people who had recently bought a new home didn't feel prepared for the experience. A big reason cited was the fact that unexpected home repair costs popped up in the first year. Here are some details about what today's new homeowners are facing with homeownership — and what they can do to improve.

What's important to new homebuyers today?
The economy and the housing market aren't the only areas where things are changing rapidly. Prospective buyers today have a changing set of values that are evident in the way they approach homeownership. In response to economic changes, a bigger portion of buyers is moving away from being the traditional "couple" when buying their first house. Many are going at it by themselves and purchasing a home on their own. Others are buying houses with a friend, family member, or unmarried partner.

Read more
10 essential things the experts say you should know about replacing a roof
roof replacement guide shutterstock 1844186038

Home remodeling projects are exciting opportunities to spice up your space and add features that will make your life easier. Home repairs can be quite stressful, especially when they come about unexpectedly. For instance, though it's not needed very often, replacing your roof is one of the most expensive home repairs to make. Whether you are acting proactively or are in dire need of a replacement, you can complete this project with far less stress than you anticipated. We talked to the experts and found out everything you need to know about replacing those shingles.

Preparing for roof replacement
Start planning your roof replacement before it's needed
A roof will last somewhere between 20 and 30 years, but problems can arise long before this best-by date.

Read more
6 essential questions to ask a handyman before you hire them
handyman with a yellow tool belt

When your home is in disrepair, it can be a big stressor. If you're a capable DIYer, you may be able to make home repairs on your own, but some jobs are best left to someone with specific areas of expertise. That's where a handyman can be a big help. They can save you time and effort and even save you money that you would have spent on new tools for the job. Most of all, a quality handyman will do quality work and you'll be happier with the result. Here's how to find a great handyman for those pesky home repairs.

Types of jobs a local handyman could help with
Handymen tend to be jacks of all trades, and most minor home repairs are within their scope of abilities. Whether the job you need to be done is too time-consuming, requires tools you don't have on hand, or is simply too advanced for your DIY capabilities, here are some common projects that a handyman near you should be able to complete.

Read more