Decrease in Mortgage Rates as Economists Revise Long-Term Forecasts | Expert Mortgage Guidance and Recommendations

**Current Mortgage Rates for June 22, 2023**

Mortgage rates have experienced a slight decrease this week, with the average 30-year fixed rate dropping to 7.08%. While interest rates on most fixed-rate mortgage products have either decreased or remained stable, adjustable mortgage rates have seen a slight increase.

**30-Year Fixed:** 7.08% (down from 7.14% a week ago)
**20-Year Fixed:** 7.08% (up from 7.07% a week ago)
**15-Year Fixed:** 6.52% (down from 6.54% a week ago)
**10-Year Fixed:** 6.61% (down from 6.65% a week ago)
**5/1 ARM:** 6.12% (up from 6.08% a week ago)
**7/1 ARM:** 6.22% (up from 6.21% a week ago)
**10/1 ARM:** 6.45% (up from 6.43% a week ago)
**30-Year Jumbo Loans:** 7.15% (down from 7.22% a week ago)
**30-Year FHA Loans:** 6.19% with 0.05 point (down from 6.32% a week ago)
**VA Purchase Loans:** 6.48% with 0.04 point (down from 6.6% a week ago)

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**Indicator of the Week: A Bleaker Mortgage Rate Forecast**

Unfortunately, the previously optimistic predictions for mortgage rate trends at the beginning of the year appear to have been overly hopeful. Revised forecasts indicate that mortgage rates will remain higher for a longer period of time than initially anticipated.

The Mortgage Bankers Association (MBA) and Wells Fargo have both revised their outlooks, predicting that mortgage rates will stay elevated. MBA initially forecasted that the 30-year fixed mortgage rate would drop to 5.3% by the fourth quarter of 2023. However, their latest release has revised the year-end rate to 5.8%. Wells Fargo’s initial economic outlook projected a fourth-quarter rate of 5.4%, but their current forecast suggests that rates won’t dip below 6% until the second quarter of 2024.

**Waiting for Better Mortgage Rates and Higher Home Prices**

A recent U.S. News survey revealed that two-thirds of this year’s homebuyers are holding out for lower mortgage rates. However, they have faced disappointment as rates are actually slightly higher now compared to when the survey was conducted in March.

Adding to the challenge, home prices have increased by about 5.5% since the survey ran. The median sales price for existing homes sold in May was $396,100, up from $375,400 in March, according to the National Association of Realtors. Buyers who were hoping for improved financial conditions now find themselves facing both higher mortgage rates and higher home prices.

**Impact of Economic Developments on Mortgage Rates**

Initially, the second half of the year was expected to bring a decline in mortgage rates. However, recent economic developments have led forecasters to revise their expectations. Federal Reserve Chair Jerome Powell confirmed in testimony to Congress that “nearly all” Fed policymakers believe it may be necessary to raise rates again in 2023.

Realtor.com economist Jiayi Xu predicts that mortgage rates will remain elevated throughout the remainder of the year due to potential rate hikes. Affordability will continue to heavily influence buyers’ decisions when purchasing a home.

**Remaining Patient in the Current Market**

For potential homebuyers, patience is becoming more essential as they navigate the current real estate market. Despite hoping for lower mortgage rates, buyers must consider the likelihood of rates remaining elevated for the foreseeable future. Additionally, the increase in home prices has added further complexity to the decision-making process.