Mortgage Rate Trend Chart 2022 October 27


After more than doubling this year, mortgage rates are expected to retreat in 2023, according to an updated forecast from the Mortgage Bankers Association.

MBA’s economists also said they expect the US to enter into a recession in the first part of next year that will be driven by tighter financial conditions, reduced business investment and slower growth globally. That will, in turn, push the unemployment rate up from its current 3.5% to 5.5% by the end of next year, according to the forecast.

“Next year will be particularly challenging for the US and global economies,” said Mike Fratantoni, chief economist and senior vice president for research and industry technology. “The sharp increase in interest rates this year – a consequence of the Federal Reserve’s efforts to slow inflation, will lead to an equally sharp slowdown in the economy, matching the downturn that is happening right now in the housing market.”


But the upshot for homebuyers is that mortgage rates are expected to come down next year, Fratantoni said. MBA is forecasting mortgage rates to end 2023 at around 5.4%. The average rate for a 30-year fixed rate mortgage is currently 6.94%, according to Freddie Mac.

Fratantoni cautioned that mortgage rates will still face plenty of volatility in the coming months as the Fed is expected to continue to raise interest rates this year.

Ultimately, the Fed’s ongoing efforts to tame inflation will slow homebuyer demand for mortgages in 2023, according to the forecast.

Mortgage origination volume is expected to decline to $2.05 trillion in 2023 from the $2.26 trillion expected in 2022, according to MBA. The forecast calls for purchase mortgages to drop by 3% next year, while refinance volume is anticipated to decline by 24%.

The slowdown in housing activity and higher mortgage rates will cut the pace of home price growth, according to MBA. The forecast projects national home prices to be roughly flat in 2023 and 2024.

“This will allow household incomes some much-needed time to catch up to elevated property values,” said Joel Kan, vice president, deputy chief economist at MBA. “However, many local markets will see home price declines, even if national price measures remain largely unchanged.”

CNN: Anny Bahney, October 2022