Source: Bankrate —
Come February, Americans anticipate the activity of Punxsutawney Phil, the climate-forecasting rodent whose shadow will signal if winter will persist longer or be shorter.
But weather isn’t the only thing we’re eager to get an expert forecast on right now. Many of us also want to know where mortgage rates will land in the second month of 2023, all the better to guide our decisions on purchasing or refinancing a home.
Here’s a silver lining among these overcast days of snow, ice and frigid temperatures: Freddie Mac reports that mortgage rates continue to dip. The benchmark 30-year fixed-rate mortgage is averaging 6.13 percent at the time of this writing, up 2.58 percent from a year ago but down from its 7.08 percent high last autumn. And the Mortgage Bankers Association (MBA) reports that for the week ending Jan. 20, mortgage applications jumped 7.0 percent over the week prior.
How will rates shake out in February? When will it become more affordable to finance a home purchase? Will Punxsutawney Phil see his shadow? For answers to all (except for the latter), we turned to a handful of pros who regularly forecast mortgage rates.
Rates in the low 6 percent range
After polling industry insiders, the takeaway is pretty clear — if undramatic: Mortgage rates likely won’t move significantly over the next few weeks. At best, they’ll trend downward, like a drifting snowflake.
“Unless the Fed unexpectedly raises the Fed Funds rate dramatically at its next meeting, or we get a surprisingly bad inflation report, it seems most likely that mortgage rates will plateau or perhaps decline slightly,” says Rick Sharga, executive vice president of Market Intelligence for ATTOM. He expects rates to average 6.0 percent to 6.25 percent for the 30-year mortgage and 5.25 percent to 5.50 percent for the 15-year mortgage loan in February.
Nadia Evangelou, senior economist and director of Real Estate Research for the National Association of Realtors, expects much of the same for the second month of the year. “Mortgage rates will continue their downward track in February,” she forecasts. “With lower inflation, smaller interest rate hikes by the Federal Reserve, and growing recession fears, the rate on a 30-year fixed mortgage will average 6.2 percent in February versus 5.5 percent for a 15-year fixed-rate mortgage.”
Bear in mind that mortgage rates, in general, have been declining slightly over the past few weeks and are now about a full point lower than when they peaked at over 7 percent back in November 2022.
“This has probably been due to several consecutive positive reports on inflation and the expectation that the Federal Reserve may be able to ease off on its quantitative tightening in the near future,” Sharga adds.
Bankrate chief financial analyst Greg McBride envisions a slightly wider rate spread this month.
“I expect the average 30-year fixed mortgage rate between 6 percent to 6.4 percent and the average 15-year fixed mortgage rate between 5.2 percent and 5.5 percent during February,” he says. “This is a wider range because I expect more volatility as we digest a Fed meeting (set for Feb. 1), incoming economic data, and the Russia-Ukraine war hits the one-year mark.”
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