EOY Forecast

We are quickly rounding the corner to the last quarter of 2023. After a somewhat anxiety inducing year, you may be wondering what to expect for the rest of the year. You’re not alone in that, and the experts have released their two cents. 

Most predictions are tied pretty closely to the economy and inflation. Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors, shared thoughts with BankRate on three possible rate scenarios for the remainder of 2023. 

Depending on decisions made by the Federal Reserve, mortgage rates might do one of three things: 

• “In scenario 1, inflation continues to remain high, forcing the Fed to raise interest rates repeatedly,” she says. “That means mortgage rates will keep climbing, possibly near 8.5 percent.”
• “In scenario 2, the Consumer Price Index responds more to the Fed’s rate hikes, and there is a gradual deceleration of inflation, causing mortgage rates to stabilize near 7 percent to 7.5 percent for 2023.”
• “Or, in scenario 3, the Fed raises rates repeatedly to curb inflation and the economy falls into a recession. This could cause rates to likely drop to 5 percent,” she says.

While each of these predictions will affect the housing market differently, the bottom line is that this year of transition is characterized by uncertainty. If mortgage rates end up keeping homeowners in place, they may opt for equity lines of credit and to make home renovations.