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2023 Mortgage Rate Trends: Expert Predictions on 30-Year Fixed & ARM Rates and What Does It Mean for Your Home Loan?

Each year, various finance industries, real estate professional associations, and government-backed organizations like Freddie Mac predict mortgage interest rate trends. These predictions sometimes differ, and there’s no guarantee that they will be accurate. However, February is the time of the year when these mortgage rate predictions tend to solidify, and different experts weigh in. Current forecasts on mortgage rates vary between 5% and 7% for 2023, depending on the expert source. When interest rates go down, the housing market tends to heat up, so if you’re in the market to buy a home or refinance in 2023, it’s a good idea to keep an eye on trends in mortgage rates.

Encouraging Mortgage Rate Forecasts

Some mortgage rate predictions show an encouraging trend of lower or steady mortgage interest rates for 2023.

First, Compass, Inc.’s Regional President Neda Navab predicts that mortgage rates are at or near their peak as of the beginning of 2023 and could be around 5% by the end of the year, thanks to the slowdown in inflation and lower U.S. Treasury bond yields that impact mortgage rates.

Another prediction from the Mortgage Bankers Association (MBA) says that “long-term rates have already peaked.” The MBA says that mortgage rates will end the year at a precise 5.2%. The MBA comprises of industry leaders, direct experts, and the leading power players originating the loans, making their predictions carry a lot of weight.

Less Optimistic Mortgage Rate Forecasts

Freddie Mac, one of the two government-sponsored home mortgage enterprises, and Fannie Mae predict that the average 30-year mortgage rate will be 6.6% at the beginning of 2023 and end the year at about 6.2%, an entire point higher than the Mortgage Banking Association.

An economist with Realtor.com, Jiayi Xu, predicts that ongoing inflation will keep mortgage rates in the 6% to 7% range in 2023.

The National Association of Realtors (NAR)’s senior economist Nadia Evangelou says that mortgage rates could end 2023 at slightly under 6% as long as inflation continues to slow down.

Adjustable rate mortgages (ARMS) offer lower interest rates than fixed-rate mortgages. Working with an experienced broker like California Platinum Realty and Loans can provide you with more choices in a mortgage that can fit your financial goals and objectives, along with delivering a home purchase loan or a refinance. Contact California Platinum Loans to discuss your options in home mortgages today.

Maximize Your Home-Buying Power in LA: A Complete Guide to Choosing the Right FHA Loan Terms – 15-Year VS 30-Year Options & Pros/Cons!

Could you get an FHA 15-year or 30-year mortgage to buy a home in Los Angeles? According to the Department of Housing and Urban Development (HUD), as of 2021, 10.85% of home purchase loans nationwide were FHA loans. And about 4.83% of home refinancing loans in 2021 were FHA loans.

The number of people using FHA loans to buy or refinance a home is going up: during the third quarter of 2022, 12.45% of home purchase loans were FHA loans, along with 12.17% of refinances.

Pros and Cons Of Different FHA Loan Terms

FHA loans can be offered to borrowers with lower credit scores and come in 15-year and 30-year terms. Both 30-year and 15-year FHA loans can provide up to $1,089,300 for a single-family home and up to $2,095,200 for a 4-unit property. So, then what may you ask are the pros and cons of 15-year FHA home loans and 30-year FHA home mortgages?

FHA 15-Year Mortgage Advantages

Borrowers who take out 15-year mortgages pay less interest over the term of their loan than borrowers with longer loan terms. One option for some buyers is to take out a 30-year mortgage and then refinance into a 15-year mortgage to reduce interest costs and increase the amount of equity they have in their home.

FHA 15-Year mortgages are available and can be a good option for buyers who want to pay their mortgage off in half the time of a traditional, 30-year mortgage term.

FHA 30-Year Mortgage Advantages

FHA loans are available for borrowers with lower credit scores or a short credit history. They also have more lenient debt-to-income (DTI) ratios than conventional home mortgages. An FHA home loan can help some borrowers buy a property they otherwise couldn’t afford due to the lack of a high down payment or a DTI ratio that doesn’t meet conventional mortgage criteria. Because Los Angeles County has increased home prices, FHA loans are available for over $1 million.

Downsides of FHA Loans

FHA loans can come with higher closing costs than conventional loans. They also require mortgage insurance premiums (MIP). FHA loans also require appraisals that ensure the property meets government standards to qualify for the loan.

Contact the experts at California Platinum Loans today and learn whether an FHA loan is right for you or whether you will benefit more from a traditional conventional loan or a non-qualified mortgage loan as a self-employed entrepreneur or business owner.

Mortgage Applications Down 2nd Straight Week in December National Housing Survey says Homebuying Sentiment is Readjusting

09 Dec 2022
California Platinum Loans
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Comments Off on Mortgage Applications Down 2nd Straight Week in December National Housing Survey says Homebuying Sentiment is Readjusting

Homebuying Sentiment is Readjusting

The Home Purchase Sentiment Index (HPSI) for Fannie Mae had its first upward movement in nine months in November, suggesting some hints that homebuyers might be accepting the new reality of housing prices and interest rates. The index, which is a summary of responses to six questions from the National Housing Survey (NHS) conducted each month, increased by 0.6 points from its all-time low in October. At 57.3 right now, it is still 17.4 points behind where it was a year ago.

Consumers’ views toward buying and selling a property, which makes up the index’s two main components, both slightly improved from their October levels but remained double-digits lower than in November of 2021. Positive responses to whether this was a good or poor time to buy a house grew by one point. Still, the net positive result—the sum of the positive and negative responses—was a negative 63% or 28 points less annually.

High mortgage rates continue to make housing unaffordable, and 62% of respondents anticipate further increases over the coming year, compared to only 10% who expect a decrease. The net of -53% is 1 point higher annually and 7 points higher than in October.

CoreLogic: Annual Home Price Growth Slows to Half of Spring Peak

According to CoreLogic, year-over-year home price growth in October was 10.1%. The index fell, and it is the lowest growth level since early 2021.

According to the company’s Home Price Index for October, several factors contributed to the slowing appreciation. Among these is the continued lack of inventory on the market. However, the lack of inventory is not due to buyer demand. Instead, it is more likely related to homeowners not wanting to sell due to the desire to keep their low-interest rate mortgage they probably obtained during the pandemic refinance and purchase craze. Additionally, the loss of purchasing power and the current state of the economy also contributed to lower housing demand.

Selma Hepp, interim lead of the Office of the Chief Economist with CoreLogic, noted that “while some housing markets have seen significant recalibration since the spring price peak and are likely to post losses in 2023, further deteriorating for-sale inventory, some relief in mortgage rate increases and relatively positive economic news may help eventually stabilize home prices.“

MBA Weekly Survey Dec. 7, 2022: Applications Down 2nd Straight Week

According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending December 2, mortgage applications decreased by over 2%. However, refinance applications increased due to dropping interest rates. The outcomes from the previous week have been modified to account for Thanksgiving Day.

On a seasonally adjusted basis, the Market Composite Index dropped by 1.9% from one week earlier. The unadjusted refinance index rose by 5% from the prior week. From 26.1% the previous week, the refinance portion of mortgage activity grew to 28.7% of all applications. Meanwhile, the seasonally adjusted Purchase Index fell by 3%.

Next week’s potential market-moving reports are:

Monday, December 12^th – NY Fed Inflation Expectations, Federal budget
Tuesday, December 13^th – Consumer Price Index, Core CPI
Wednesday, December 14^th – Federal Funds Rate Announcement, Fed Chair Jerome Powell News Conference
Thursday, December 15^th – – Initial and Continuing Jobless Claims
Friday, December 16^th – No Report

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

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