According to economists from the Mortgage Bankers Association (MBA), the housing market, which has slowed significantly from last year as mortgage rates continue to climb, could be what will push the United States into a recession l ‘next year.
Mortgage interest rates have risen significantly since last year amid the Federal Reserve continued rate hikes. The average 30-year fixed-rate mortgage has fallen from just over 3% this time last year to nearly 7% currently, according to data from Freddie Mac.
And as interest rates rise, the housing market has slowed due to lower demand for new homes and refinancings, MBA chief economist and senior vice president Mike Fratantoni said on Tuesday. of the society’s annual conference in Nashville. This slowdown in the housing market is expected to push the United States into a recession, which is planned to come early 2023.
But the housing market could also be what pulls the economy back again, Fratantoni said. Interest rates could start falling next year after the Fed eases its rate hikes. Mortgage rates could slide to 5.5% by the end of next year, and fall even lower thereafter, according to MBA forecasts. Once rates fall, activity in the housing market could pick up, helping pull the United States out of a recession.
If you’re looking to buy a home or refinance your current mortgage, comparing several options can help you find a lower rate. You can visit Credible to find your personalized interest rate without affecting your credit score.
INFLATION TO REMAIN HIGH UNTIL 2024, RECESSION UNDERWAY: MBA FORECAST
Mortgage rates should not rise
At its November meeting, the Federal Open Market Committee (FOMC) increased the federal funds rate of 75 basis points. This is the fourth straight 75 basis point hike and the sixth rate hike this year.
And the Fed indicated at that meeting that Fed members plan to continue raising interest rates in the coming months. Although the Fed has acknowledged that it may need to slow the pace of interest rate hikes, it is likely to raise the federal funds rate further before pausing, according to the minutes.
While this monetary policy has pushed mortgage rates higher, it may not continue to do so in the coming months despite continued Fed rate hikes. Fratantoni explained that future rate hikes are likely already priced into current interest rates and may not rise much more, if at all, in the near future.
Although mortgage rates are higher than they were last year, you may still be able to get a lower rate and save some money. You can visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
FED SAYS INFLATION CONCERNS REMAIN AND WILL CONTINUE TO RAISE RATES
Recession likely for early 2023
Although the Federal Reserve will likely continue to raise rates in the coming months, economists predict that a recession is on the horizon for early 2023.
“We’re really, really confident that we’re going to be in a recession next year,” Fratantoni told the conference.
Consecutive negative GDP readings in the first half of 2022 has created a debate about whether or not the United States is in a recession. Typically, economists consider a recession to occur after two consecutive quarters of negative GDP growth. But the White House said that may not be the case in this case.
Other economists also agree that a recession will come next year. At Fannie Mae’s latest forecast predicts that the housing market will push the United States into a recession in early 2023.
If you’re struggling in today’s economy, you might consider taking out a personal loan to help pay off high-interest debt at a lower rate. To see if this is the right option for you, contact Credible to speak with a loan expert and get all your questions answered.
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