By MIAMI Realtors® Chief Economist Gay Cororaton
The average 30-year fixed rate mortgage rate fell sharply to 6.61% for the week of November 17, the largest weekly drop in 41 years. This week’s sharp drop came on the heels of October data on consumer and producer prices that showed inflation has peaked and is on course towards the Fed’s 2% goal.
Slowing inflation increases the chances that the Federal Reserve will implement fewer and smaller rate hikes in 2023. I anticipate that with inflation under control, a 50 basis point increase in the federal funds rate in its December meeting is more likely, followed by smaller rate hikes in the first quarter of 2023 and possibly a pause in the second half of the year as the Fed assesses the effect of the rising mortgage rates on the economy.
Mortgage rates are likely to stay below 7% for the rest of 2022 and to stay below 7.5% in 2023. The plateauing of the interest rate increases in 2023 should breathe life into the housing market and as buyers adjust their expectation to the “new” normal of a 7%.
Housing and commercial real estate conditions remain favorable in the South Florida market due to relatively affordable home prices and a business-friendly environment.