Inflation was up 6.4% year-over-year in January, the most recent U.S. Consumer Price Index revealed, and until the Federal Reserve Board succeeds in cooling the economy, borrowing costs will continue to rise in 2023. Mortgage rates are up to 6.62% from a low of 5.99% at the start of the month, and even such a small change amounts to more than $100 tacked onto the average monthly mortgage payment, Realtor.com reports.
While rates aren’t expected to exceed 7% levels reached a year ago, they could remain in the 6% range throughout much of the year, creating an ongoing affordability hurdle for many budget-conscious buyers.
As long as rates remain below 7%, buyers will return to the housing market, predicts mortgage lender Shmuel Shayowitz, president of Approved Funding in River Edge, NJ.
“With rates mid-6% and lower, we’ve gotten strong buyer demand,” he says. “People have adapted and are willing to move forward.”
However, home prices remain high and many buyers are no longer able to afford the homes they wanted due to those higher rates.
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