Mortgage Rate Predictions for Mid- to Late-2023

July 31, 2023 - 11 min read

Will interest rates finally come down?

Intrigued about where mortgage interest rates are headed in the short term?

We surveyed eight experts across the real estate sector for their mortgage rate predictions for the second half of 2023. Their answers differed significantly, ranging from 5.25% to 7.75% for the average 30-year fixed-rate mortgage.

Read about what drove their expectations.

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At a glance...

How high or low will mortgage rates go in the second half of 2023?

The insiders we asked anticipate that 30-year mortgage rates should clock in anywhere from as low as 5.25% to as high as 7.75% by the end of December, versus 4.875% and 6.90% for the 15-year fixed mortgage rate.

When averaged together, mortgage rate predictions call for 30-year fixed rates at 6.29% and 15-year fixed rates at 5.73% in the year’s second half. However, several circumstances could trigger unexpected rate fluctuations over these six months, such as Federal Reserve decisions, inflationary influences, global x-factors like the continued war in Ukraine, and recessionary concerns.

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Mortgage experts advise that you decide to buy a home based on your financial readiness and ability to afford it, rather than trying to time the market.

The fluctuations in interest rates are highly unpredictable, so waiting for borrowing costs to decrease might actually lead to higher rates instead. Moreover, it is crucial to bear in mind that if you proceed with a purchase now, there is a favorable probability that you will have opportunities to refinance in the future at a lower interest rate, whether in 2023 or down the road.

What’s impacting mortgage rates right now?

In the first half of 2023, the benchmark 30-year fixed-rate mortgage see-sawed slightly, but remained firmly in the 6% range on average, with a low of 6.09% and a recent high of 6.79%, per the Federal Reserve Bank of St. Louis.

Among the reason why mortgage rates remain relatively high is persistent inflation. The good news of late is that, according to the Bureau of Labor Statistics, the nation’s inflation rate fell to 3% in June, its lowest level since March 2021. Still, inflationary pressure has played a role in pushing up interest rates in recent years.

Another element at play is action by the Federal Reserve. In June, the Fed’s policymakers chose to keep the policy rate unchanged, following 10 consecutive rate hikes, within the range of 5% to 5.25%. But the Fed also signaled the need for at least two more interest rate hikes prior to the end of 2023 and made one in July.

The ongoing conflict in Ukraine has also created global uncertainty, affecting financial markets and contributing to the volatility experienced in both global and U.S. stock markets. These fluctuations have indirectly influenced mortgage rates.

In addition, recessionary concerns and general economic uncertainty have contributed to a somewhat unpredictable rate climate, prompting lenders to adjust their rates accordingly.

These conditions created an environment where mortgage rates have persisted in a costlier territory for borrowers. Based on our poll of the experts (details below), this trend will likely continue throughout the remainder of 2023.

“Inflation is causing mortgage rates to hover in the 6%-to-7% range. Currently, inflation is the key driver of mortgage-backed securities, and subsequently, of mortgage rates,” Mike Hardy, managing partner, Churchill Mortgage, explains. “As inflation is contained and the future outlook for inflation improves, mortgage rates should trend down. This will bring more buyers into the marketplace, as more Americans will be able to afford a home.”

Peter C. Earle, economist, American Institute for Economic Research, puts a lot of eggs into the monetary policy and liquidity basket here.

“We’ve had over 500 basis points of interest rates added in 15 months, and are seeing a huge contraction in the money supply,” he says. “We are also seeing less affordable conditions owing to the spread between longer-term US Treasury yields and mortgage rates. The catch to all of this is, if a nasty recession were to strike the US, the Fed might lower rates. But a recession would drive up unemployment and slow economic growth, so the inevitably falling mortgage rates would be accessible by fewer buyers.”

What might cause mortgage rates to go down?

Derek Morgan, chief real estate officer at, agrees that mortgage rates are currently being influenced by the steady economy and the Federal Reserve’s consideration to lift the pause on rate hikes. “But the anticipation of a market slump toward a possible recession in the next six to 12 months may lead to lower mortgage rates, as authorities could employ rate cuts to stimulate the economy.”

Remember: Mortgage rates are constantly in flux, and some recent increases have been followed by brief declines.

“I believe that we’ve already peaked in terms of mortgage rates for this cycle, and are unlikely to see the 30-year mortgage exceed the 7.5% level it reached in late in 2022,” notes Rick Sharga, president/CEO of the CJ Patrick Company. “Absent any unpleasant surprises in future inflation reports, I believe the Federal Reserve will limit rate hikes to no more than one or two for the rest of the year. If so, mortgage rates should start to come back down – slowly – over the rest of the year. Historically, this has happened every time the Fed has ended a rate hike cycle.”

Low unemployment rates are yet another impetus that could drive Fed decisions to change interest rates and, consequently, impact mortgage rates, believes Al Lord, founder/CEO, Lexerd Capital Management.

“Unemployment and inflation expectations are counterbalancing each other, and this has caused the Fed to pause rate increases for the moment. With the concerns of the debt ceiling behind us, the only unanticipated factor that will cause rates to decline will be a sudden economic downtown,” Lord posits.

Expert mortgage rate predictions for the second half of 2023

To gauge where mortgage interest rates are headed across the next six months, we polled a group of real estate and lending experts. Read on for their rate forecasts, trends identified, and advice to buyers and homeowners.

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Peter Earle, economist at the American Institute for Economic Research

H2 2023 mortgage rate forecast: 7.50% (30-year), 6.90% (15-year)

What will drive mortgage rates in the second half of 2023?

Three things will impact rates over the coming six months: Fed policy, credit tightness, and consumer wherewithal. What would drive rates lower would be any recession sufficiently bad to make the Fed end its contractionary policy campaign and begin lowering rates.

What would send mortgage rates higher would be more Fed tightening, more regional bank problems, and similar scenarios. My prediction is that we will see a US recession within the next 12-to-18 months, but before that the Fed will raise the policy rate a bit more.

Advice to home buyers and homeowners

It’s risky and on some level impossible to time markets. But given the Fed’s propensity to lower rates when the US economy gets into trouble, this might be a point in time where discretion is the better part of valor. The US economy has been sputtering along since the summer of 2022.

If economic growth sags, with inflation increasingly under control the Fed may be more prepared to lower rates than they were six to 12 months ago. Of course, waiting could backfire, and buying a home during a recession adds a degree of risk. But while there are almost certainly one or two more rate hikes coming in 2023, the current market-implied policy rates slope downward over the next few years.

Derek Morgan, chief real estate officer at

H2 2023 mortgage rate forecast: 5.7% (30-year), 5.0% (15-year)

What will drive mortgage rates in the second half of 2023?

Given an anticipated economic slump leaning toward a recession, the Federal Reserve would likely implement measures to stimulate the economy, such as decreasing the federal funds rate. This could in turn lead to lower mortgage rates. For the 30-year fixed-rate mortgage, a significant decrease in rates might bring it to an average of around 5.5%-5.7% across the next six months.

Similarly, for the 15-year fixed-rate mortgage, we might see an average rate in the range of 4.8%-5.0%. These estimates assume that the decrease in the federal funds rate would be passed along to consumers in the form of lower mortgage rates.

Advice to home buyers and homeowners

Prospective homebuyers in the second half of 2023 should remain flexible and strategically consider their options. They should continuously evaluate market conditions, paying close attention to changes in interest rates, home prices, and inventory.

Buyer candidates should ensure they are financially prepared, have a clear understanding of what they can afford, and be pre-approved for a mortgage if possible.

Dennis Shirshikov, strategist at and professor of economics and finance at City University of New York

H2 2023 mortgage rate forecast: 7.75% (30-year), 6.75% (15-year)

What will drive mortgage rates in the second half of 2023?

Currently, mortgage rates are influenced by the Federal Reserve, and with the economy improving, they’ve signaled they might start raising interest rates, which would push mortgage rates up. Another factor is inflation. When inflation rises, so do interest rates. If the Fed raises interest rates to combat inflation, I’d anticipate a moderate increase in mortgage rates – perhaps in the region of 0.5 to 1 percent.

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Advice to home buyers and homeowners

Know what you can afford and stick to your budget. Also, be ready to move quickly. In this market, homes can go fast. Finally, don’t be afraid to negotiate and work with a knowledgeable real estate agent who understands the local market. Real estate is a long-term investment, so don’t get too caught up in trying to time the market perfectly. The right time to buy is when you find the right home and are financially prepared to make the commitment.

Jason Gelios, realtor at Community Choice Realty

H2 2023 mortgage rate forecast: 5.5% (30-year), 5.0% (15-year)

What will drive mortgage rates in the second half of 2023?

I don’t see mortgage rates increasing much in the second half of 2023 because of housing inventory remains at lower-than-anticipated levels. Factors such as the need to decrease inflation, the economic landscape, the jobs market, and various political issues will all play a part in where mortgage rates head over the rest of 2023. One factor I see in how mortgage rates will behave is the upcoming election year of 2024. During an election year, consumers tend to hold back on major purchases, therefore causing rates to decrease in an effort to drive an increase in purchases.

Advice to home buyers and homeowners

Prospective home buyers should have all their ducks in a row, from knowing their budget and credit situation to knowing what the market is doing and how they need to react to make a solid home purchase. 2023 home buyers should also be open to homes that may not be in top-notch shape, with the possibility of getting them cheaper and without much demand, to renovate them through renovation financing. This is what many home buyers are doing in my area to achieve their dreams of home ownership.

Al Lord, founder and CEO at Lexerd Capital Management

H2 2023 mortgage rate forecast: 6.75% (30-year), 6.35% (15-year)

What will drive mortgage rates in the second half of 2023?

Continuing economic expansion with full employment and stubbornly high inflation rates will be the key factors that most likely will force the Fed to further slow the economy by raising interest rates an additional 50 basis points by the end of 2023.

In contrast, when unemployment rates rise to over 4% and inflation declines to a 3% handle, interest rates will decline. By the end of 2023, interest rates should only decline marginally – by 25 basis points – relative to current rates and continue to decline in 2024.

Advice to home buyers and homeowners

Home shoppers should be looking for value in their decision to purchase a property. While financing any home may be costly, what counts is the long-term value of the investment. The location of the property, trends in local inventory, and demand conditions will influence long-term property values.

Buyers should not rush into the decision to purchase “just any” property but should evaluate local demographic trends, regional projections in household formation, supply of new homes, and employment trends.

Rick Sharga, president and CEO at CJ Patrick Company

H2 2023 mortgage rate forecast: 5.75% (30-year), 5.0% (15-year)

What will drive mortgage rates in the second half of 2023?

I believe that mortgage rates are likely to end 2023 lower than they began the year. They’ve been stuck in a fairly narrow band for several months, between 6.5 and 7.0%, and are likely to stay there for most of the summer before beginning to decline. If inflation continues to fall towards the Fed’s target of 2% and the Fed stops its rate hikes. we could see mortgage rates back in the 5% range by the end of the year.

Advice to home buyers and homeowners

A lot of prospective home buyers have moved to less expensive regions within their state, or to entirely different states, to find a home they can afford. Properly priced homes are still selling very quickly, within 18 days on average, according to the National Association of Realtors, so buyers need to have their financing in place before they even begin looking to buy so that they can move immediately on a property they want.

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Kobi Lahav, senior managing director and director of sales at Living New York

H2 2023 mortgage rate forecast: 6.15% (30-year), 6.0% (15-year)

What will drive mortgage rates in the second half of 2023?

The Fed will become more aggressive to get inflation down even more. Cooling inflation and a rise in demand will probably lead to the lowering of interest rates in 2024; until then we will probably see the Fed aggressively trying to push inflation to around 2%, which will allow for one or two interest rate hikes in 2023, affecting mortgage rates. The war in Ukraine is further influencing inflation, which, in turn, translates to higher interest rates.

Advice to home buyers and homeowners

Buying now is wise since prices are under pressure and will probably even go down more. Don’t try to time the market: Buy now when prices are lower; then, if and when interest rates go down, your property value, as a result, will come up and you’ll be able to refinance a higher valuation at a lower interest rate.

Mike Hardy, managing partner at Churchill Mortgage

H2 2023 mortgage rate forecast: 5.25% (30-year), 4.875% (15-year)

What will drive mortgage rates in the second half of 2023?

Mortgage rates will trend down over the next six to 12 months, and there will be volatility that accompanies this downward trend. Think of it as someone on a downward escalator with a yo-yo, as there will be times when it is increasing, but it ultimately swings back the other way pretty drastically. The key here is going to be inflation and expectation of inflation.

As the federal funds rate is increased by the Fed, it’s like putting the brakes on the economy. This will make it harder for businesses to grow and earn a profit, which will slow their expansion and ability to take out loans for expansion. This action is what many assume will lead to a recession, with mortgage rates coming down in tandem with inflation coming down.

Advice to home buyers and homeowners

For home hunters, I would advise if they have the capacity to responsibly buy in this market, go ahead and stake your claim. I don’t think there will be a better time in the next five years to buy a home, especially with the likelihood of mortgage rates coming down and more buyers flooding the zone.

I realize it’s a significant challenge for a lot of folks given affordability issues, but I don’t see the competition for new homes becoming any easier. With an additional wave of buyers on the horizon, my advice is to buy now if you can, then be ready to restructure debt in the future, possibly with a refinance, when rates improve.

The bottom line

Whether you’re a home buyer or seller, a high mortgage rate environment can present challenges.

While future mortgage rate movements are tough to predict due to the bevy of impacting factors, having an educated guess where they might go can be helpful. However, many real estate experts will tell you it’s never a bad time to buy a house as long as you can comfortably afford it.

If you’re ready to start your path to homeownership or sell your current property, reach out to a local mortgage professional today.

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Erik J. Martin
Authored By: Erik J. Martin
The Mortgage Reports contributor
Erik J. Martin has written on real estate, business, tech and other topics for Reader's Digest, AARP The Magazine, and The Chicago Tribune.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.