By: Paul Centopani
https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional
Mortgage rate forecast for next week (Feb. 27-Mar. 3)
Interest rates followed February’s upward trend, rising for the third straight week.
The average 30-year fixed rate mortgage (FRM) shot up from 6.32% on Feb. 16 to 6.50% on Feb. 23, according to Freddie Mac. The recent increases go hand-in-hand with the economy continuing to display strength. However, the more a borrower shops around, the more likely they can lock in a lower rate.
“Our research shows that rate dispersion increases as mortgage rates trend up. This means home buyers can potentially save $600 to $1,200 annually by taking the time to shop among lenders to find a better rate,” said Sam Khater, Freddie Mac’s chief economist.
Find your lowest mortgage rate. Start here (Feb 28th, 2023)
In this article (Skip to…)
· Will rates go down in March?
· 90-day forecast
· Expert rate predictions
· Mortgage rate trends
· Rates by loan type
· Mortgage strategies for March
· Mortgage rates FAQ
Will mortgage rates go down in March?
Mortgage rates fluctuated greatly in 2022. The average 30-year fixed rate went as low as 3.22% on Jan. 6 and reached a high-water mark of 7.08% on Nov. 10, according to Freddie Mac.
The year’s big rate movements can be attributed largely to the Federal Reserve’s aggressive actions to help combat decades-high inflation. However, with inflation starting to cool, the Fed eased its foot off the gas in February and is expected to make smaller rate hikes in 2023.
With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.
Experts from Attom Data Solutions, First American, Mortgage Bankers Association, and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in March.
Find your lowest mortgage rate. Start here (Feb 28th, 2023)
Expert mortgage rate predictions for February
Ralph DiBugnara, president at Home Qualified
Prediction: Rates will moderate
“The Fed seems to be leaning toward raising 50 basis points again next meeting, with fear of continued high inflation rising. It is not slowing down as fast as they had predicted. With that being said I believe the 30-year fixed rates will hold around 6.5% and 15-year fixed somewhere around 5.875% until we see some significant reduction in the inflation numbers.”
Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors
Prediction: Rates will rise
“Mortgage rates will continue to be above the 6% threshold in March. While investors expected the Federal Reserve to slow down on rate hikes, recent strong economic data suggests that there may be additional hikes this year. Jobs are at record highs, the unemployment rate is near record lows, inflation is exceeding expectations, and strong retail sales show that people continue to spend despite borrowing costs.
Thus, upcoming inflation data and Fed’s next rate hike are the two main factors that will drive mortgage rates in March. If inflation drops below expectations, this could help mortgage rates to hover in the low range of 6%.”
Selma Hepp, chief economist at Corelogic
Prediction: Rates will rise
“Unfortunately, recent inflation readings suggested that taming inflation may be more difficult than some anticipated. The Fed will persist on its course of further tightening and is unlikely to start lowering interest rates until late 2023, which brought mortgage rates down since the November peak. As a result, we may see mortgage rates creeping back up and remaining above 6.5% throughout the spring.”
Odeta Kushi, deputy chief economist at First American
Prediction: Rates will moderate
“Mortgage rates may bounce around until the market has more clarity about the outlook for inflation. While there is reason to believe that inflation will subside in months to come, strong employment gains and a resilient consumer have markets spooked that inflation will persist, thereby requiring the Federal Reserve to remain restrictive for longer. The March FOMC meeting will provide some insight into the Fed’s path on interest rate hikes. If incoming data points to softening inflation and the Fed doesn’t turn more hawkish in March, mortgage rates may moderate.”
George Ratiu, senior economist at Realtor.com
Prediction: Rates will moderate
“Mortgage rates are going to move up and down in a 6% – 7% range over the next few weeks, in response to several macro factors, including the Federal Reserve’s monetary policy, economic performance and inflation. Rates crested 7% in October and November of last year, following inflation running at a 40-year high and the Fed’s aggressive rate hikes to combat it. Since then, we have seen rates glide toward 6% until a couple of weeks ago when they rebounded.
The zig-zagging movement of mortgage rates is a reflection of an underlying tension between financial market expectations and economic data which continues to highlight resilience. Investors have been expecting the economy to fall into a recession for the past eight months, in response to the Fed’s rate hikes. At the same time, a strong job market and rising wages have pushed retail sales higher, and maintained consumer spending as a driving engine of economic growth.”
Rick Sharga, president and CEO at CJ Patrick Company
Prediction: Rates will rise
“While they may not surpass the peak rates we saw in November, when most mortgages had interest rates above 7%, it seems likely that March 30-year loans will have rates close to that, probably staying between 6.5-7.0%. This doesn’t bode well for the Spring homebuying season, as these higher rates will strain affordability for buyers, and discourage homeowners with lower mortgage rates from listing their homes for sale.
The main culprit is inflation, which isn’t coming down as quickly or dramatically as the Federal Reserve hoped. Coupled with stronger-than-anticipated jobs reports, this probably means that the Fed will raise the Fed Funds Rate again, and need to keep it elevated longer than the market had anticipated. Further complicating things is that there’s been a recent surge in yields on U.S. Treasuries, with the 10-year bond flirting with a 4% yield, making a drop in mortgage rates more unlikely.”