flexiblefullpage - default
Currently Reading

The Federal Reserve Anticipates Rising Interest Rates in 2023

Advertisement
billboard - default
Economics

The Federal Reserve Anticipates Rising Interest Rates in 2023


June 18, 2021
Federal Reserve
Photo: Aaron Kohr | stock.adobe.com

In Federal Open Market Committee meetings this week, Federal Reserve members said interest rates will likely rise twice in 2023. Interest rates today might increase in response, says Realtor.com, which has the potential to cool the red-hot housing market. Higher interest rates would price more buyers out, removing some competition from the market, possibly leading to fewer bidding wars. Realtor.com’s chief economist predicts mortgage rates exceeding just over 3% during the next few weeks. Mortgage rates for a 30-year fixed-rate loan averaged at 2.96% for the week ending June 10. But if the increases do come in 2023, interest rates might be between mid-3% and 4%.

While this may not sound like much of an increase, even fractions of a percentage point can have a substantial impact on a buyer’s bottom line. A single percentage point can add more than a $100 to a homeowner’s monthly payment and tens of thousands of dollars over the life of a 30-year loan, depending on the rate and size of the mortgage.

That could further slow down the market as more potential buyers could simply be priced out.

Mortgage interest rates are typically influenced by the Federal Reserve’s short-term interest rates. But they are more closely aligned with the 10-year U.S. Treasury bonds.

That’s because lenders typically bundle up mortgages they make and sell these mortgage-backed securities in the secondary mortgage market. This frees up cash they can use to make new loans. Investors view Treasury and mortgage bonds as safer, less lucrative investments than the stock market. If the economy is weaker, these bonds become more appealing. When it’s stronger or inflation is stronger, as it is now, investors aren’t as interested because the bonds are worth less if inflation is moving up quickly.

Read More
 

Related Stories

New-Home Sales

Consumer Confidence Reaches 5-Month High Despite Recession Fears

America's big spenders sprang back into action in September, but when it came to home purchases, consumers weren't quite so confident

Sales + Marketing

Lessons Learned From Previous Housing Market Disruptions

For home builders navigating today's housing marketplace, hope is not a strategy, wishing is not an action plan, and success is not an accident

Financing

What the Federal Reserve's Latest Rate Hike Could Mean for the Housing Market

Mortgage rates have finally topped 6%, and with more gains on the horizon, experts warn that the U.S. housing market could be moving toward a recession

Advertisement
boombox1 -
Advertisement
native1 - default
halfpage2 -

More in Category




Advertisement
native2 - default
Advertisement
halfpage1 -

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.