U.S. Mortgage Rates Set To Tumble Next Year, Wells Fargo Says

Abstract

U.S. Mortgage Rates Set To Tumble Next Year, Wells Fargo Says Mortgage rates likely will start to tumble in early 2023, according to a Wells Fargo forecast. Getty Mortgage rates likely will start to tumble in early 2023, according to a Wells Fargo forecast. The relentless climb in mortgage rates that chilled housing demand this year likely will end in early 2023, according to a forecast from Wells Fargo. The average U.S. rate for a 30-year fixed mortgage eligible to be purchased by Fannie Mae and Freddie Mac - a so-called conforming home loan - probably will peak in the first quarter at a 22-year high of 7% before dropping to an almost two-year low of 5.8% in the final three months of 2023, according to a forecast from Wells Fargo economists on Thursday. "The move-up in financing costs has greatly reduced affordability for buyers and locked in homeowners who hold lower mortgage rates, bringing home buying and selling to a virtual standstill." Borrowing costs began rising after the Federal Reserve stopped a pandemic-era bond-buying program earlier this year and hiked its benchmark rate to try to cool the economy and curb inflation. Sales of previously owned home fell for an eighth consecutive month in September, the longest retreat in 15 years, as higher mortgage rates made it tougher for families to afford homes, the National Association of Realtors said in a report last month. "The housing sector continues to undergo an adjustment due to the continuous rise in interest rates," said Lawrence Yun, NAR's chief economist.