Welcome to December, the height of holiday shopping season — except for home shopping, that is.
Historically, many homebuyers put their plans on hold until January, and with affordability diminished by higher mortgage rates, that might be the case even more so this year.
Then again, if rates pull back, as they did last month, some buyers might get back in the market. Should house-hopeful buyers lock in a rate any time soon? We turned to the pros for answers.
December mortgage rate predictions
Barring an unexpected economic shock — or a more aggressive-than-anticipated move by the Federal Reserve mid-month — mortgage rate watchers anticipate rates to stay consistent. Rates have fallen some on the news that one measure of inflation, the Consumer Price Index, came in at a smaller 7.7 percent in October.
“It will take more evidence of easing inflation pressures, but the 30-year fixed will be around the 6.5 percent mark and the 15-year fixed around the 5.8 percent mark in December,” says Greg McBride, chief financial analyst for Bankrate. “If investors believe inflation has peaked, that opens the door to a decline in mortgage rates.
“Bond yields and mortgage rates have pulled back notably since the release of two main inflation reports — the Consumer Price Index and the Producer Price Index — showed better-than-expected or less-bad-than-expected results,” says McBride.
If investors believe inflation has peaked, that opens the door to a decline in mortgage rates.
— Greg McBrideChief financial analyst, Bankrate
While the Fed has some impact on mortgage rates, specifically variable-rate products, fixed mortgage rates are primarily influenced by the 10-year U.S. Treasury yield. The spread between the two has widened, but the yield has also dropped recently.
“Consequently, I see some moderation in mortgage rates by the end of the year,” says Clifford Rossi, a professor at the Robert H. Smith School of Business with the University of Maryland, who for December expects the 30-year rate to average 6.8 percent to 7 percent and the 15-year rate to average 6.1 percent to 6.3 percent.
“Unless inflation surprises to the upside and the Fed feels it needs to continue to aggressively hike rates, we may be at or near a cyclical peak for mortgage rates and see them plateau or even begin to tick down over the course of 2023,” says Rick Sharga, executive vice president of Market Intelligence for ATTOM.
