Mortgage rate forecast for next week (Jan. 30- Feb. 3)
Interest rates continued their descent, decreasing for the third week in a row.
The average 30-year fixed rate mortgage ticked down from 6.15% on Jan. 19 to 6.13% on Jan. 26, according to Freddie Mac. If you’re looking to buy, acting now could help you avoid the heightened competition of spring.
“Home purchase demand is thawing from the months-long freeze that gripped the housing market. Potential homebuyers remain sensitive to changes in mortgage rates, but ample demand remains, fueled by first-time home buyers,” said Sam Khater, Freddie Mac’s chief economist.
In this article (Skip to...)
- Will rates go down in February?
- 90-day forecast
- Expert rate predictions
- Mortgage rate trends
- Rates by loan type
- Mortgage strategies for February
- Mortgage rates FAQ
Will mortgage rates go down in February?
Mortgage rates fluctuated greatly in 2022. The average 30-year fixed rate went as low as 3.22% on Jan. 6 and reached a high-water mark of 7.08% on Nov. 10, according to Freddie Mac.
The year’s big rate movements can be attributed largely to the Federal Reserve’s aggressive actions to help combat decades-high inflation. However, with inflation starting to cool, the Fed eased its foot off the gas in December and is expected to make smaller rate hikes in 2023.
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 Attom Data Solutions, First American, Mortgage Bankers Association, and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in February.
“Mortgage rates will likely moderate in February ... As the economy shows signs of weakening and inflation has taken a turn in favor of the Fed’s target range”–Selma Hepp, chief economist at CoreLogic
Expert mortgage rate predictions for February
Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors
Prediction: Rates will drop
“Mortgage rates will continue their downward trek. This is the first time after nearly two years that the inflation rate is finally lower than it was the previous year. This means that consumer prices are higher but they are rising at a slower pace than a year ago.
At the end of 2022, inflation was 6.5% compared to 7.0% in 2021. Lower inflation, smaller interest rate hikes by the Fed, and growing recession fears will push rates down even further in February.”
Mike Fratantoni, chief economist at the Mortgage Bankers Association
Prediction: Rates will moderate
“The Federal Reserve will continue to increase short-term rates to fight inflation, and will ultimately be successful, but it will be early 2024 before inflation reaches their 2% target. Although short-term rates will continue to increase as the Fed pushes them up, we are forecasting that long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.2%.”
Danielle Hale, chief economist at Realtor.com
Prediction: Rates will moderate
“I expect mortgage rates to bounce up and down in response to data over the next month or so. If inflation continues to improve and the economy continues to grow, rates are likely to continue to hover around 6%. February kicks off with a meeting of the Federal Open Market Committee (FOMC) the rate-setting group at the Fed and is expected to raise rates by only another 25 basis points.
That would mark the smallest increase since this tightening cycle began, in March 2022. Because this move is widely expected and smaller than what was anticipated before recent inflation data in December and January that show a slowdown in price growth, the rate hike itself is unlikely to cause a big shakeup.”
Selma Hepp, chief economist at Corelogic
Prediction: Rates will moderate
“Mortgage rates will likely moderate in February as investors keep a watchful eye on the Federal Reserve’s upcoming meeting and with the expectation of signs of a potential reversal in the Fed’s strategy. As the economy shows signs of weakening and inflation has taken a turn in favor of the Fed’s target range, some believe that the Fed will reverse its tightening policy sooner than it is communicating.
While mortgage rates have been falling since November’s peak, they still show some volatility as the economic outlook remains somewhat uncertain, a trend that will likely continue over the next few months. Interest rate volatility has been one of the main drivers of the increase in mortgage rate spread. As the Fed’s actions and economic outcomes become clearer, the spread will also contract, driving mortgage rates further down.”
Odeta Kushi, deputy chief economist at First American
Prediction: Rates will moderate
“Mortgage rates may stabilize in February. Favorable inflation data has helped to put some downward pressure on rates recently, prompting many to think that we’re past the mortgage rate peak. However, the path of mortgage rates is dependent on inflation continuing to decelerate.
While the expectation (and hope) is that inflation will continue to cool, we’re not out of the woods yet. Rates may bounce from week to week, but the volatility should lessen with continued improvements in inflation numbers and softening labor market data.”
Rick Sharga, EVP of market intelligence at Attom Data Solutions
Prediction: Rates will moderate
“Unless the Federal Reserve does something that spooks the market at its February meeting, it’s likely that mortgage rates will plateau and possibly decline slightly during the month, running somewhere between 6.0-6.25%.
At the risk of sounding like a broken record, mortgage rates will be driven almost entirely by whatever the Federal Reserve does in its mission to get inflation under control. The more aggressively the Fed acts, the more likely it is that we’ll continue to see volatility in the financial markets and rising mortgage rates.”
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.
However, with inflation cooling, the Fed starting to slow its rate hikes, and the likelihood of a recession, many experts currently believe mortgage interest rates will descend or move within a tighter range compared to the spikes we saw earlier in 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 early 2023
The 30-year fixed-rate mortgage was averaging 6.13% as of Jan. 26, according to Freddie Mac. Only one of the six major housing authorities we looked at project 2023’s first quarter average to finish below that.
The National Association of Realtors and the Mortgage Bankers Association sit at the low end of the group, estimating the average 30-year fixed interest rate will settle at 6.1% and 6.2%, respectively, for Q1. Meanwhile, the National Association of Home Builders had the highest prediction of 7.16% by the end of March 2023.
|Housing Authority||30-Year Mortgage Rate Forecast (Q1 2023)|
|National Association of Realtors||6.10%|
|Mortgage Bankers Association||6.20%|
|National Association of Home Builders||7.16%|
Current mortgage interest rate trends
Mortgage rates dropped for the third week in a row, as inflation numbers showed more signs of moderation.
The 30-year fixed rate decreased from 6.15% on Jan. 19 to 6.13% on Jan. 26. The average 15-year fixed mortgage rate also fell, going from 5.28% to 5.17%.
|Month||Average 30-Year Fixed Rate|
Source: Freddie Mac
Mortgage rates moved on from the record-low territory seen in 2020 and 2021 and hit a 14-year high in 2022. However, they followed a downward trajectory in December and are still below average from a historical perspective.
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.
|December 2022||November 2022||October 2022|
|Conforming Loan Rates||6.52%||6.58%||7.06%|
|FHA Loan Rates||6.42%||6.51%||6.85%|
|VA Loan Rates||6.25%||6.35%||6.74%|
|Jumbo Loan Rates||6.71%||6.50%||6.78%|
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 February 2023
Mortgage rates shot up rapidly to open 2022, driven by inflation and Fed hikes. The growth slowed as inflation declined and rates came down as the year ended.
At its December meeting, the central bank said it anticipated smaller hikes for 2023, and many housing experts agree. With less aggressive Fed policies putting less upward pressure on interest rates, house hunters and refinancers should have opportunities to lock in a more attractive rate.
Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.
Wield your negotiating power
It’s especially good timing for borrowers because winter typically provides better home-buying conditions.
“Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak mortgage rate last fall. As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers,” said Mike Fratantoni.
With buyer demand in a lull and lower competition, home listings are sitting for sale longer. February provides a great opportunity for borrowers to leverage their position in a cooling marketplace ahead of spring’s typical rush of buyers.
Shopping around could save you big bucks
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
Current mortgage rates are averaging 6.13% for a 30-year fixed-rate loan and 5.17% for a 15-year fixed-rate loan, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.
Mortgage rates could decrease next week (Jan. 30- Feb. 3, 2023) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve taking measures to counteract inflation or if a global event brings economic uncertainty.
If the historically high inflation of 2022 continues to dissipate and the economy falls into a recession, it’s likely mortgage rates will decrease in 2023. Although, it’s important to remember that interest rates are notoriously volatile and are driven by many factors, so they can rise during any given week.
Mortgage rates may continue to rise in 2023. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022. However, if the U.S. does indeed enter a recession, mortgage rates could come down.
Freddie Mac is now citing average 30-year rates in the 6 percent range. If you can find a rate in the 4s or 5s, you’re in a very good position. Remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below-average interest rates, while poor-credit borrowers and those with non-QM loans could see much higher rates. You’ll need to get pre-approved for a mortgage to know your exact rate.
For the most part, industry experts do not expect the housing market to crash in 2023. Yes, home prices are over-inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a subprime mortgage crisis waiting in the wings.
At the time of this writing, the lowest 30-year mortgage rate ever was 2.65%. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely used benchmark for current mortgage interest rates.
Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least three to five lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.
That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable-rate mortgage to a low fixed-rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short-term 10- or 15-year mortgage to pay off your loan early.
It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.
Start by choosing a list of three to five mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre-approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.
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.