Mortgage Rates Expected to Stay Around 7% Through Year-End

What impact will mortgage rates have on home affordability in 2023? Current projections indicate that mortgage rates could hover around 7% through year-end, placing continuous pressure on housing affordability unless there is a significant decrease in inflation. Sticky inflation and the possibility of another Federal Reserve hike could lead to even higher mortgage costs, while wider mortgage-backed securities spreads are adding further strain to borrowing rates. A substantial drop in mortgage rates would require sustained progress in inflation, calmer long-term yields, supportive signals from the Federal Reserve, and healthier spreads in mortgage-backed securities. For buyers, investors, and those looking to refinance, today’s mortgage rates should be considered the planning baseline, with any future relief seen as a potential advantage.

For expert insights on the Santa Cruz real estate market, connect with Seabea Ghoph, REALTOR® at Keller Williams Thrive.