Market Update - August 11, 2023

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

Rates are provided by Housing Wire in conjunction with Optimal Blue. Rates are updated in real-time. Optimal Blue data is calculated using actual locked rates with consumers across 42% of all mortgage transactions nationwide. Rates are inclusive of locks that occur below par, at par and therefore consider discounts and rebates.

For the week of Aug 4th – Aug 10th, 30-year and 15-year interest rates increased.

Sam Khater, Freddie Mac's Chief Economist, highlighted the sustained upward trajectory of mortgage rates, stating, "For the third straight week, mortgage rates continued creeping up and are now just shy of seven percent." He emphasized that "There is no doubt continued high rates will prolong affordability challenges longer than expected, particularly with home prices on the rise again. However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid."

The Federal Reserve temporarily paused its rate hikes in June, only to resume in July with a one-quarter percentage point increase. As the inflation rate hovers around 3 percent, economists predict that the central bank's battle against inflation is nearing an end. Mike Fratantoni, chief economist at the Mortgage Bankers Association, expects mortgage rates to decline once the Federal Open Market Committee (FOMC) signals the peak. He noted, "We do expect mortgage rates to trend down once the [Federal Open Market Committee] clearly signals that they have reached the peak for this cycle, as the reduction in uncertainty with respect to the direction of rates should narrow the spread of mortgage rates relative to Treasury benchmarks."

Rather than worrying about mortgage rates, though, homebuyers should focus on what they can control: getting the best rate they can for their financial situation.

Mortgage Rate Trends:

After historically low mortgage rates throughout most of 2020 and 2021, rates surged in 2022 due to the Federal Reserve's aggressive interest rate hikes. Now, mortgage rates are well above where they were a year ago. What does this mean for homebuyers this year?

"Mortgage rates have hovered in the 6% to 7% range for the past 10 months. Though home prices have softened slightly nationally, the still-high cost of borrowing means hopeful home buyers have felt little relief," said Hannah Jones, economic research analyst at

Should inflation continue its decline and the Fed maintains or cuts rates, a slight reduction in mortgage rates in 2023 is plausible. However, they're highly unlikely to return to the rock-bottom levels of just a few years ago.

The most recent housing forecast from Fannie Mae calls for the average 30-year fixed mortgage rate to close out the year at around 6.6%.

Fed Watch: Looking ahead, all eyes are on the upcoming September 20th Federal Open Market Committee (FOMC) meeting. According to the CME Group, 9.5% of forecasters predict an increase in interest rates, while 90.5% predict rates will remain the same. None of the forecasters expect rates to decrease.

Market Review:

  • Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 85.44% for purchase transactions, 12.02% for cash-out refinances, and 2.55% for rate and term refinances.
Per Black Knight 50.07% of all Retail loan production were Government Loans (FHA, VA, USDA), while 49.92% were Conventional and Non-Conforming loans.

News You Can Use

*Communication is intended for Industry Professionals only and not intended for Consumer Distribution

Interest rate and annual percentage rate (APR) are based on current market conditions as of 08/10/2023, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 08/10/2023 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac's economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac's business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an "as is" basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

*Not available in New York or Hawaii. Prosperity Home Mortgage, LLC, Prosperity Home Mortgage, LLC dba Edina Realty Mortgage, and HomeServices Lending are not affiliated with or endorsed by any government agencies. Some and/or all qualifying criteria may be set by independent third party program sponsors. Contact your mortgage consultant for program eligibility and details.

Home Advantage is only available with the purchase of a property with an FHA home loan. Low down payment options may not be the best option for all borrowers. Consult your mortgage consultant to review potential loan scenarios and financing options to determine the home loan that is right for you. Not all borrowers will qualify.

1. Standard & customary closing costs still apply.

2. Forgiven after 5 years if there is no 90 day or greater delinquency on the first 60 payments of the FHA first lien and property remains a primary residence. f the borrower moves out, sells, or refinances the mortgage, borrower owes the remaining unpaid principal balance.

3. Repayable second mortgage lien is amortized over 30 years and repayable with a 10-year balloon payment