Mortgage Interest Rate Predictions: Will Rates Go Down in June 2023?

Mortgage rate forecast for next week (June 12-16)

Following three weeks of increases, interest rates took a step down.

The average 30-year fixed rate mortgage (FRM) declined from 6.79% on June 1 to 6.71% on June 8, according to Freddie Mac.

“Mortgage rate movement is likely to remain somewhat muted this week, but upward bias remains as investors await next week’s Consumer Price Index inflation report and FOMC forward guidance. Cooling inflation and a general economic slowdown would put downward pressure on long-term interest rates like the 10-year Treasury yield,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans.

In this article (Skip to...)

• Will rates go down in June?
• 90-day forecast
• Expert rate predictions
• Mortgage rate trends
• Rates by loan type
• Mortgage strategies for June
• Mortgage rates FAQ

Will mortgage rates go down in June?

Mortgage rates fluctuated significantly to open 2023. In the first quarter, the average 30-year fixed rate went as low as 6.09% on Feb. 2 and climbed up to 6.73% on March 9, according to Freddie Mac.

The range can be largely attributed to the Federal Reserve’s ongoing fight against inflation, juxtaposed with uncertainty in the banking sector sparked by Silicon Valley Bank’s collapse. However, with duress permeating the financial market and U.S. debt ceiling talks, the Fed may continue making hikes to bring interest rates down.

With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.

Experts from CJ Patrick Company, First American, Realtor.com, and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in June.

Expert mortgage rate predictions for June

Ralph DiBugnara, president at Home Qualified

Prediction: Rates will rise

“Rates have adjusted up to an average on 30-year fixed between 6.8% and 7.1% and on the 15-year fixed between 6.375% and 6.5%. Buyers and mortgage consumers have mostly adjusted to the new reality of interest rates being higher as they have been here for two consecutive quarters now.

The biggest issue continues to be the lack of homes for sale which is pushing home prices higher and making them less affordable combined with higher interest rates. Although inflation is cooling down the uncertainty concerning the raising of the debt ceiling is keeping rates higher for now and the immediate future.”

Danielle Hale, chief economist at Realtor.com

Prediction: Rates will moderate

“Mortgage rates could be in for a roller coaster ride in June. The May Fed statement lacked specific forward guidance about additional rate hikes for the first time since the Fed began raising rates in March 2022. While some took this to mean an end to rate hikes was nigh and rate cuts could be on the horizon, the Fed minutes and Fed speakers have sounded a more hawkish tone. As a result, futures markets are pricing in a greater likelihood of a rate increase in June and a 0% chance of a rate cut.

Long story short - getting inflation under control continues to be priority number one for the Fed. While down from its peak, inflation has shown significant sticking power. This means that the Fed is likely to keep short-term rates higher for longer than previously expected, and mortgage rates may see some upward pressure over the next few weeks. Lower inflation readings could alleviate that pressure, and mid-June will be the next check-in on price changes. Fortunately, markets have adjusted higher inflation expectations over the last few weeks in May, so if June’s inflation data shows relief on price growth, there will be room for mortgage rates to ease in response.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will moderate

“Between the FOMC meeting and the looming default deadline, June brings with it significant financial and mortgage rate uncertainty. On the one hand, if inflation continues to trend in the right direction and the Federal Reserve decides to pause interest rate hikes, prospective buyers could get some reprieve from rising mortgage rates.

Even so, it’s unlikely that we will see a big drop in mortgage rates until inflation makes significant progress towards the Fed’s target or there’s a decline in economic activity. On the other hand, debt ceiling concerns have already resulted in higher mortgage rates in May, and protracted negotiations may prompt rates to rise further. All in all, it’s likely to be a see-saw month for mortgage rates.”

Stan Middleman, president and CEO at Freedom Mortgage

Prediction: Rates will rise

“With the country at near full employment, I expect inflation to continue. In terms of rates, my bias is that rates will be flat to slightly higher in the short run.”

Rick Sharga, president and CEO at CJ Patrick Company

Prediction: Rates will drop

“With the potential debt ceiling crisis apparently behind us, I’d expect mortgage rates to come back down into the 6.5-6.75% range as we enter June. Absent any unpleasant surprises in the month’s inflation numbers, rates may actually begin what’s likely to be a steady — but very gradual — descent for the rest of the year, ending June below 6.5%.

Some of this depends on the bond market and where yields go on the 10-year U.S. Treasury. But at the moment, there’s more than a 300 basis point spread between yields on the 10-year and rates on the 30-year mortgage, suggesting that the latter could easily come down a full point between now and the end of 2023 once some of the risk and volatility have come out of the financial sector.”

Mortgage interest rates forecast next 90 days

As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to big interest rate growth. The average 30-year fixed-rate mortgage more than doubled within the course of the year.

As inflation gradually cools, the size of the Fed’s rate hikes are coming down. Additionally, the likelihood of a recession has many experts believing mortgage interest rates will move within a tighter range compared to the spikes we saw in early 2022.

Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.

Mortgage rate predictions for 2023

The 30-year fixed-rate mortgage averaged 6.71% as of June 8, according to Freddie Mac. All five major housing authorities we looked at projected 2023’s second quarter average to finish below that.

National Association of Realtors and Wells Fargo sit at the low end of the group, predicting the average 30-year fixed interest rate to settle at 6.3% for Q2. Meanwhile, Fannie Mae and the Mortgage Bankers Association have the highest forecasts of 6.4%.

Current mortgage interest rate trends

Mortgage rates grew for the second week in a row, as inflation continues running too high.

The 30-year fixed rate decreased from 6.79% on June 1 to 6.71% on June 8. The average 15-year fixed mortgage rate also fell from 6.18% to 6.07%.

Source: Freddie Mac

After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 14-year high in 2022. Many experts and industry authorities believe they will follow a downward trajectory in 2023. Whatever happens, interest rates are still below historical averages.

Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Mortgage rate trends by loan type

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Following are 3-month mortgage rate trends for the most popular types of home loans: conventional, FHA, VA, and jumbo.

Source: Black Knight Originations Market Monitor Report

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.

Mortgage rate strategies for June 2023

Mortgage rates displayed their famous volatility to open 2023. Ongoing inflation battles and Fed hikes drove growth, then uncertainty in the banking sector led to downtrends.

At its May meeting, the Fed made a relatively small hike amid the banking turmoil. However, as inflation proves to be sticky and uncertainty around the U.S. debt ceiling caused interest rates to rise, the central bank may need to continue its rate hikes.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Be ready to move quickly

Indecision can lead to failure or missed opportunities. That holds true in home buying as well.

Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.

“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.

And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.

Buyer demand is lower than a typical year, but the market usually heats up in spring and summer. Being decisive (and prepared) should only play to your advantage.

Shopping around isn’t only for the holidays

Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.

Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

• Your credit score and credit history
• Your personal finances
• Your down payment (if buying a home)
• Your home equity (if refinancing)
• Your loan-to-value ratio (LTV)
• Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

Mortgage interest rate FAQ

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

¹Today's mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

Selected sources:

• https://www.blackknightinc.com/category/press-releases
• https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
• http://www.freddiemac.com/research/datasets/refinance-stats/index.page