One of the biggest questions I was asked over the holidays and into the new year is whether we can expect interest rates to return back to the 3% range that we enjoyed early last year. First, we all have to remind ourselves that the mortgage interest rates in the 2-3% range were an anomaly that resulted from actions taken by the federal reserve during the pandemic when there was a critical need to maintain a stable economy.
With interest rates averaging a high of 7.08% in November 2022, it's no wonder that consumers are hoping for interest rates to go down. Expert predictions at this time indicate that we may be enjoying rates in the 5% range in 2023. That would be an improvement from current average rates reported by Freddie Mac where the average 30 year fixed rate is 6.48%. I have been researching and listening to both local and national lending experts and I have yet to hear anyone predict rates returning to rates similar to where we were a year ago. At this time last year the average 30 year fixed mortgage rate was 3.22%.
What I share with future homebuyers is that the rise in interest rates has decreased buyer demand. This decrease in demand creates an environment where today's buyers are able to negotiate on price and terms, unlike the environment in the last 2 years where homes routinely received multiple offers, offers had to be above the listed price, appraisals or inspections had to be waived, and buyers had to offer long and no cost seller leaseback periods. Buying now allows you to lock in a sales price that can be negotiated. Sellers and home builders are also willing to negotiate a mortgage buy down that can help offset today's interest rates. This allows buyers to benefit from a lower payment despite today's rates.
Another concession offered by many lenders to their borrowers is the ability to refinance at a reduced cost in the near future. It is easy for home buyers to focus on the rise and fall of interest rates since that is the news topic that is covered ad nauseum in the news. However, this isn't a full perspective shared on how this environment benefits home buyers that prefer to buy at reasonable prices and enjoy the opportunity to negotiate on their home purchase.
If you or someone you know is considering buying a home in 2023, don't rely on the news media for advice and strategies. Instead, reach out to me and I would be happy to schedule a buyer consultation and strategy session to provide you with the information you need to help you determine what your buying options are and when the best time to buy based on your circumstances. This session is complimentary and without obligation and can be provided in person at my office or via a Zoom meeting, so reach out and let's get your session scheduled.
