Estimation of economic growth with a lower mortgage loan rate
With mortgage rates dropping this year, many homeowners are taking advantage of the lower costs associated with refinancing their mortgages. For those looking to purchase a home in 2023, the good news is that these low rates are forecasted to remain in place throughout the end of 2021 and into 2022.
Here’s what you should know about the potential impacts on your mortgage in 2023.
- Home prices will likely increase: Lower mortgage rates have already prompted some buyers to enter the market, which has caused home prices to rise as a result. This is especially true for starter homes and other lower-priced homes traditionally favored by first-time buyers. As rates remain at or near all-time lows through 2023, rising demand could lead prices to surge even further.
- You may qualify for a larger loan amount: The lower interest rate environment also means that lenders may be willing to offer larger loan amounts than usual for mortgages in 2023. So if you were considering buying a more expensive home now than you were one year ago—or planning to take out an additional loan—you may qualify for more money from your lender based on current trends.
- Flexible repayment plans could become available: While there’s no guarantee that lenders will make new types of flexible repayment plans available by 2023, it is possible that they could opt to do so in order to attract more applicants who are interested but put off by traditional repayment terms and conditions such as large down payments or high monthly payment responsibilities. So keep an eye out just in case something should come up in the coming years that would make repayment easier on you financially going forward.
- Rates could start slowly increasing again: Interest Rates vary by economic factors, meaning they can’t stay low forever—especially as inflation rises over time—so if you’re considering taking out a mortgage before the end of 2023, it’s important to keep this caveat in mind and consider making your move soon rather than waiting until later when interest rates could start increasing again slightly after bottoming out this past year or two.
Examine how the mortgage rate forecast can affect your finances
With the Fed Funds rate near zero in 2020, mortgage rates have also seen historic lows, giving many homeowners an opportunity to refinance or purchase a home with attractive financing. However, there is some uncertainty about what the future holds for mortgage rates, as the Fed intends to raise them back up to pre-pandemic levels by 2023.
Banking and real estate experts suggest that this means homeowners should act quickly if they want to take advantage of low current mortgage rates — especially since those rates are expected to increase over the next three years. Having a personal assessment of your circumstances by Aaron Kerscher from Fairway Mortgage could be the best course of action.
Ultimately, understanding what these rate projections mean can help you make more informed decisions about your mortgage options.